Like every good contractor, you’ve trained your employees on safety procedures and how to drive safely while transporting equipment and building materials, but the truth is a simple, unforeseen accident can turn a profitable construction project into a total financial loss. Buying construction liability insurance is a sound business decision but before you jump in and sign a contract, there are critical things you should know before you make this important decision.

Types of Insurance

Before you research insurance companies, self-assess your insurance needs and constructions risks so you’ll have a clear idea of exactly what type of insurance you’ll need. For example, general liability policies will cover bodily injury and property damage but will not cover the costs to repair defective work. Builder’s risk insurance will cover specific named “perils” such as fire, explosion and theft. Review the list carefully to make sure it covers your needs. Another common aspect of builder’s risk insurance is exclusions, every policy will have them, so go over them in detail with your provider so you know what is and what is not included in your policy.

Professional liability insurance will cover you if you fail to deliver on services or do negligent or incomplete work. Depending on the project type, this may not be a significant concern. Carefully weigh the cost of additional insurance against the likelihood of malpractice.

Finding The Best Insurance Provider

Finding a provider that specializes in construction is key to the decision process. You want a company that knows the inherent risks in your business and will offer Inland Marine Insurance, for example, that will protect your construction equipment while it’s in transit. The next factor to consider is the company’s national insurance rating. A.M.Best provides a letter-graded rating of all insurance companies that will assess their ability to pay claims and customer service. There are couple ways to approach this research. For example, an internet search on the keywords “contractor liability insurance Needham MA”, is just a starting point. Review all the websites for contractor-specific policies, check their national rating, and finally give them a call to get more details and get a sense of their customer service. The other approach is start with a referral from a construction contact you trust. It’s advisable to still go through the same vetting process above because what works for your contact may not be a good fit for you.

Deductibles and Other Dilemmas

Carefully weigh the amount of the deductible. It’s tempting to go for the low-premium-high-deductible approach to your policy. But be sure you’re financially comfortable covering that deductible amount in the event of a claim. If it’s possible, try to strike a balance between the deductible amount and the premium.

Don’t be seduced by the cheaper policy if the company does not meet your quality and service standards. Construction insurance is a necessary business expenditure and an investment in the security of your business, so looking at it with that mind-set is the best approach. Finally, insurance policies are also about peace of mind, so if you’re agonizing over whether to add a policy that you need, do it. In the end, you’ll be able to focus on doing great work and that will catapult your business into success.