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Construction is both a lucrative and risky business. As long as you have enough capital, a solid business plan, safe and experienced workers and construction liability insurance should be able to experience a profit and steady business growth. However, one big accident can jeopardize an entire business and also your career. Here are some of the biggest risks in the construction industry, and why it’s important to make sure you’re properly insured before starting any projects.
Safety is the highest priority on any construction site, and it’s also the greatest liability. If you walk by any construction site you’re likely to find some if not all of the following:
- Large equipment
- Scattered building materials
- Nail guns
- Concrete mixers
Between all of these objects, any number of incidents can occur. It’s imperative to talk to insurance experts at agencies like SB One Insurance Agency to ensure you have the best safety coverage possible.
Believe it or not, project scheduling is another one of the highest risks in construction. Because the schedule represents the largest cost on the project, large errors can cost several thousands of dollars. Even being one day off can have significant implications.
Some construction companies are responsible for overseeing design specifications, and if there are any problems with the design you can actually be held responsible and not necessarily the architect.
Having the best possible insurance coverage can help protect you and your assets.
Working in the construction industry one understands that safety has to be of the utmost importance, and this includes everyone from the workers to those who visit the site. It is vital for all contractors to purchase coverage and this is available locally through a Newton Construction insurance agency. They will provide policies for property damage, theft, or any person injured while on the job site.
Occupational Health and Safety plans
The Occupational Safety and Health Act (OSHA) require that contractors provide a safe workplace for their employees, one that is free from any known or recognizable hazards.
Anytime you are working where trucks are constantly moving back and forth, along with scaffolding, large pieces of debris, tools, and heavy machinery, these all pose concerns because of the risks involved in working under these conditions. Fortunately, experienced contractors understand these risks and willingly comply and work hard to develop a safe workplace.
Types of laborers available for hire
The construction industry generally secures their crew through subcontractors, hired employees, labor brokers, or independent contractors. While there are no specific laws governing how a company works with subcontractors, it’s generally advised that a contractor drew up a contractual agreement ensuring that all subcontractors are licensed, bonded, and insured. They are equally responsible for the work performed and may be sued by a client if the work is subpar or not completed.
Hired employees, on the other hand, do not have those same requirements. For example, when hiring employees, a contractor takes on additional obligations such as withholding taxes, paying wages and benefits, as well as complying with employment law. They must also provide workers compensation insurance in case there are any on the job injuries.
When engaging a broker to find labor, the contractor must pay the broker directly. They will have a similar relationship as when they hire their own employees since they are also considered employees while performing work for the contractor’s company.
When hiring independent contractors (self-employed individuals), they will pay them directly, but unlike employees, they’re not responsible for paying benefits or withholding taxes. There are, however, strict tax reporting requirements for working with independent contractors that should be understood and followed to avoid breaking any rules or laws regarding this type of employment arrangement, and in all cases, a Newton Construction insurance agency can provide all needed policies, which should be in force at all times.
As a contractor operating in the Garden State you must be aware that no construction jobs for businesses and residential properties are done without some type of new jersey contractors insurance policy. Banks, as well as other lenders, simply will not make loans for a construction project unless the proper type of insurance is in place to protect their own interest, as well as others involved in these processes.
Contractors insurance is required on every single project and, in many instances its a requirement to have some sort of specific coverage in order to be awarded a job. Construction insurance provides coverage for materials, natural disasters, other inherent risks, and employees along with the business itself. However, the insurance industry, along with the construction industry, is always looking to provide the latest coverage on each and every unique situation.
A policy that fully protects your interests
You have to realize that you have a lot at stake, including your equipment and tools, while undertaking any construction job, due in part to the additional risk involved in working in open, and often hazardous, construction sites. The many exposures you’re likely to face can also vary from one site to the next, and during all phases of the construction process. These are issues and concerns that are best alleviated by purchasing a builders risk policy.
As in other property policies, there are choices you’ll need to make as to any available coverage options before construction is approved or commences. Clearly the construction lenders, as well as the developer and builder, plan to do a lot of due diligence regarding the builders risk policy’s terms and conditions.
Another area of insurance coverage for buildings under construction or renovation that need consideration has to do with any costs associated with a loss that ends up delaying construction, or possibly increases costs, due to a covered loss under the builders risk policy. An example of this would be soft cost or delay in opening, which can be substantial, but coverage must be added to a builders risk form in order to be covered.
Any questions that you have about the unwritten limitations in an all risk policy also need to be discussed and understood. Speak to a qualified agent who can address your questions and concerns about all new jersey contractors insurance products.
When your clients take on huge, multi-million dollar construction jobs the last thing they need to find out is that they have serious coverage gaps to contend with. They’re going to need a liability policy that serves as all-encompassing insurance and will protect all of the contractors and subcontractors working on this large project.
You can inform them that Construction Projects Wrap Up insurance is purchased for larger construction project costing over $10 million dollars. Wrap-up insurance is available both, as an owner-controlled and a contractor-controlled policy.
Owner-controlled versus contractor-controlled
The owner-controlled insurance program, (OCIP), is purchased by the owner on behalf of the builder or contractor. The owner assumes responsibility for the various risks and exposures associated with the project. Included in this insurance program are workers compensation insurance, general liability, excess liability, pollution liability, professional liability, a builder’s risk policy, and railroad protective liability.
On the other hand, contractor-controlled insurance programs (CCIPs) indicate a consolidated insurance program that is provided by the contractors and sub-contractors overseeing the project. This typically provides worker’s compensation and general liability coverage to all enrolled contractors and subcontractors for operations occurring at a specific project site. While the cost of Construction Projects Wrap Up insurance can be expensive, it can also be divided among general contractors and sub-contractors, which in turn spreads out the cost.
Why purchase wrap up insurance?
Jobs of this scope often requires hundreds of contractors that work in tandem, and relying on the individual policies of all of these people that are on site injects an enormous amount of risk into the project. Investing in a wrap up program merely fends off gaps in coverage, such as lapsed policies and inadequate limits.
The use of a singular insurance carrier streamlines the claims process allowing injured workers to get the help they need in a much more efficient manner. Furthermore, Construction Projects Wrap Ups typically include site safety programs that strive to avoid those accidents from happening in the first place.
As a broker, it is in your best interest to speak with clients embarking on these large projects and suggest ways to better protect their investment.