There are a lot of things that go into running a construction company. You have to worry about the safety of your workers, the quality of your materials, and making sure you finish on time and within budget. And one of the biggest concerns for any business owner is protecting their company financially.

That's where insurance comes in. Construction companies must have a solid insurance plan to protect themselves from potential liabilities. But with so many types of insurance available, it can be tough to know which ones you need.

But First, Why Do Construction Companies Need Insurance?

Construction companies have a lot of potential liabilities. If one of your workers is injured, you could be facing a lawsuit. If your company is responsible for damaging property, you could be on the hook for repairs. And if something goes wrong with a project, you could lose money.

Insurance can help protect your company from these potential liabilities. It can help cover the cost of legal fees, repairs, and lost income. And it can give you peace of mind knowing that your business is protected.

12 Types of Insurance for Construction Companies

1.   General Liability Insurance

This type of insurance covers third-party bodily injury and property damage claims from your construction business operations. It can also provide coverage for other risks, like product liability claims and personal and advertising injury claims. If you have any employees, this is one of the most important types of insurance you can carry since it will protect you from claims arising from their work.

2.   Workers' Compensation Insurance

This insurance is required in most states if you have any employees and it's mandatory in California. It covers medical expenses and lost wages for injured workers on the job. Workers' compensation insurance can also provide death benefits to surviving family members during a work-related death. These include weekly payments to help replace lost wages and funeral expenses.

3.   Commercial Auto Insurance

You'll need commercial auto insurance if you use any vehicles for business purposes. This type of insurance covers liability and property damage claims arising from car accidents. It can also cover certain other risks, like theft and collision damage. The most important thing to remember with commercial auto insurance is that your personal auto policy will not cover business use.

4.   Equipment Insurance

This type of insurance covers the replacement or repair costs of your construction equipment if it's damaged or stolen. It's important to note that equipment insurance typically has a limited coverage amount, so you'll want to ensure you have enough to cover the total value of your equipment. This will help ensure you're not left with a significant financial burden if your equipment is damaged or stolen.

5.   Property Insurance

Property insurance covers the physical structures of your construction business, like your office or warehouse. It can also cover the contents of your business, like tools and equipment. If you lease your business property, your landlord's insurance will typically only cover the building itself, so you'll need to carry your property insurance to protect your business contents.

6.   Builder's Risk Insurance

Builder's risk insurance is a type of property insurance that covers the materials and supplies used in construction. It can also cover the cost of labor if your project is damaged or destroyed before it's completed. Lenders for construction loans typically require builder's risk insurance, so it's essential to check with your lender to see if you need this coverage.

7.   Contractors Professional Liability Insurance

Contractors professional liability insurance, also known as CPL insurance, protects individuals like contractors and building professionals (architects, engineers, etc.) in the event of construction errors. Designing and constructing a building is a complicated process involving many people, and CPL insurance covers risks not always covered by General Liability Insurance.

8.   Product Liability Insurance

If you manufacture, distribute, or sell any products, you need product liability insurance. This type of insurance covers third-party claims arising from injuries or damages caused by your products. It's a great way to protect your construction business from lawsuits, and it can also provide peace of mind to your customers.

9.   Business Interruption Insurance

This type of insurance can help you cover the costs of lost income if your construction business is forced to shut down due to an unexpected event. This can include things like natural disasters, fires, and theft. Business interruption insurance can help you keep your construction business afloat during these difficult times.

10. Crime Insurance

Crime insurance can help you protect your construction business from losses due to crime, like theft, vandalism, and arson. This type of insurance can also cover the cost of employee dishonesty, like embezzlement. Crime insurance is crucial insurance to protect your construction business from financial losses due to crime.

11. Employment Practices Liability Insurance

This insurance protects your construction business from third-party claims alleging discrimination, harassment, and other employment-related wrongdoing. It can also cover the cost of defending yourself against these claims in court. If you have any employees, this is an essential type of insurance. 

These are just a few of construction businesses' most common types of insurance. Of course, your specific needs will depend on the nature of your business. But, in general, these are the types of insurance you should consider carrying.

12. Pollution Liability Insurance

Pollution Liability Insurance, also commonly referred to as environmental insurance, helps protect businesses from unexpected pollution exposures that may not be covered by standard casualty and property policies. It fills an important insurance coverage gap for contractors.

Contaminated sites, whether on existing property or future building projects, can create losses and/or damages that might include claims for bodily injury, property damage and cleanup costs. Contractor’s Pollution Liability can help businesses mitigate these risks and address problems when they occur.

Pollution Liability Insurance also helps companies at a time when environmental concerns are driving global debate and influencing how business is conducted. The way a business manages environmental issues can affect its profitability and reputation.

As a construction business owner, it's essential to ensure you have the right insurance to protect your business. There are many different types of insurance available, each offering additional coverage. The ten types of insurance described above are some of the most important for construction businesses. 

If you're unsure which type of insurance is right for your business, contact DiNicola Insurance Services. We are a leading construction insurance provider, and can help you find the right policy for your needs. Call us at (415) 564-4400 or contact us online to learn more.