What Is Construction Insurance?
Construction insurance is a broad category of insurance policies that provide protection during construction projects. The owner and general contractor will want to insure the project against the risk of physical loss or damage during construction. “Construction insurance” is not itself a form of insurance, but merely refers to insurance that relates to construction projects.
Builder’s risk insurance is a type of property insurance that is often correlated with construction insurance. Builder’s risk insurance provides coverage for the property owner, the contractor, and potentially others with an interest in the project against risks of loss to the construction project. The purpose of builder’s risk insurance is to provide coverage for fortuitous loss occurring during construction. U.S. Fire Insurance Co. v. Sovran Construction Co., 854 So. 2d 221, 222 (Fla. Dist. Ct. App. 2003). Builder’s risk policies can cover not only physical damage, but also economic losses due to delays in completion. Terra-Adi International Dadeland, LLC v. Zurich American Insurance Co., 20 Fla. L. Weekly Fed. D 678 (U.S. S.D. Fla. 2007). Therefore, it is dependent on the policy as to what will be covered by insurance. Most basic builder’s risk policies cover damages caused by fire, weather, vandalism, or theft.
Commercial general liability insurance is another construction insurance that provides liability protection to businesses in the case of bodily harm or property damage during the course of business. This general liability usually covers faulty workmanship and job-related injuries.
There are also errors & omissions/ professional liability insurance (E&O). E&O is an insurance that protects an individual should a claim be made about an error or mistake made during business or an omission where a contractor failed to do something. For example, an engineer makes an error in their calculations, which causes a building to have structural problems, the owner of that building might sue the engineer, but the E&O policy might cover that claim.
Inland Marine Insurance is another type of construction insurance that can be beneficial to general contractors. While the name comes from an era when this insurance covered primarily ocean-bound materials and vessels, it is not the case today. Inland marine insurance usually covers property in transit and the equipment used by contractors and developers. This covers the cost of such items as forklifts, excavators, building materials and more.
Commercial auto insurance covers company-owned vehicles and equipment from damages from vehicle accidents, theft, and vandalism. This insurance is required in every state when the company purchases a vehicle for employee or owner use.
There are also other types of insurance for construction projects such as construction bonds. A construction bond is a type of surety bond that protects against disruptions or financial loss due to a contractor’s failure to complete a project. These bonds will ensure that construction project bills will get paid. These bonds provide great coverage because the construction industry is one of the most volatile industries. Our attorneys at RAK Law Firm have extensive experience in reading and litigating insurance policies and bonds. Insurance representatives don’t always have the claimant’s best interests in mind but the attorneys at RAK Law Firm do.
Who Is Required to Have Construction Insurance?
Generally, contractors are not required to have builder’s risk insurance, but many general contractors are required to have some commercial general liability insurance. For more information on determining whether you are required, you can contact your local relevant authorities or you can contact the lawyers at RAK Law Firm to be advised on your options.
What Happens When There is a Claim?
In most cases, insurance will cover what they promised, however, there are some instances when the insurance company investigates the claim, and they determine that the claim wasn’t covered. Insurance companies can deny claims in any field of insurance from Builder’s risk insurance to commercial auto. If the insurance company determines the claim isn’t covered, then the company gets to keep their money and the damages get placed on the insured. This can be a huge problem for the insured because they most likely cannot afford the cost of the damages. The next and only step is to hire an attorney who specializes in construction insurance.
Here at RAK Law Firm, our attorneys have decades of experience handling construction insurance cases who consistently fight for their client’s rights, as well as offering a myriad of other legal services. If you have any questions or concerns arising from construction insurance, please do not hesitate to contact us at (407)-437-0319.
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