Insurance For Contractors & Construction Businesses

From D.O.K. Insurance Agency

We know how to protect your construction business from risk that requires a deep understanding of the industry. No matter the size of your company or project, we have you covered for all your insurance needs.

DOK Insurance Agency Contractors Insurance Highlights

  • Multiple carriers for all lines of your insurance needs
  • We have markets/carriers for any contractor exposure handyman start-ups to national construction empires
  • Tract homes, high-rise, HOA projects accepted
  • Ability to cover large projects
  • Capacity to offer Frame Construction
  • Scaffolding and Construction Forms coverage available
  • Pollutant Clean Up and Removal coverage available
  • Removal of subsidence exclusion
  • Flood and Earthquake coverage available

Biggest Coverage Gaps & Common Mistakes

Can this list be a “read more” type drop-down/expansion? So it would only show each of the titles 1-4 that is in blue right now.

  • Performing work outside your scope of licensing and/or not telling your insurance company all the type of work you perform:

    One of the most common fines levied on contractors by government agencies is due to performing work that you are not licensed/permitted to do. Similarly, if you don’t tell the insurance company that, for example, you are a concrete contractor that occasionally performs excavation work, you give the insurance company a way to deny any claim you file.

  • Choosing a low-rated carrier:

    Insurance Companies are given a financial strength rating by the A.M. Best Company and Standard & Poor’s.A contractor’s insurance company with less than a “B” rating can pose problem for two reasons: 1. There is a risk of the company going out of business and 2. If you perform work for other contractors, larger companies and government entities, they will require you to be insured with a highly rated company (sometimes “A-“ or better or “B” and better)

    If you are someone that hires subcontractors, you should have the same conditions of not accepting any sub that is covered by a lower ranked company.

    If you aren’t sure about your insurance company’s rating, please give us a call at 425-242-5252.

  • Choosing the wrong agency to work with:

    • It goes without say that every serious contractor and construction company needs to have a solid relationship with an independent broker. Here is what sets us apart from some other agencies:
    • We are independent so have a variety of companies to choose from.
    • When available, we will provide you with multiple offers to choose from
    • Each renewal, we will re-shop your policy if we have seen a reason to believe we can find you something better
    • As a client, you will not only be able to request to have one of our licensed agents to create a certificate for you but you will also have access to our 24/7 Online Certificate System that allows you to create your own Acord 25 forms that most general contractors and project owners will request.
    • Our commercial lines agents attend frequent training seminars and classes offered by the State and some of our insurance carriers to stay on top of this everchanging industry.

  • Not Hiring and Handling Subcontractors Correctly

    When you hire a subcontractor to do work for you, he or she must carry General Liability Insurance and must have the same limits of liability as you do. Unfortunately, we see it more common when the construction industry is booming and contractors are desperate to find help from anyone that knows how to use a hammer and saw.

    What happens if your subcontractor does not carry general liability insurance or lower limits than you? One problem that may arise is when your insurance company comes and audits your books at the end of the policy year. If you do not have a Certificate of Insurance for the subcontractor on file, your insurance company will add the value of the subcontractor to your payroll and you will end up paying the premium for the subcontractor who did not have a general liability policy.

    It goes without say that the bigger risk is that any mistake made by the subcontractor that results in a claim and/or lawsuit will ultimately come back to you. If the subcontractor isn’t organized and established enough to carry a general liability policy, he isn’t worth taking the risk by hiring.

    So before hiring a subcontractor, even if he is a “good friend”, make sure to check his license status, insurance limits and make sure that he is licensed and insured to perform the work that you hire him for. Your subcontractor’s insurance company or agent should have no problem providing an insurance certificate that outlines the type of work he is insured for. Lastly, ask to be added as an additional insured on their policy.

Exclusions To Your Contractor General Liability Policy

Just like with any type of insurance policy, there is no such thing as “full coverage.” Over the years, insurance companies learned the hard way that they needed to exclude certain risk especially when it comes to contractor risks. While many believe that insurance companies have deep pockets and are just trying to get away from paying claims, it is important to purchase an insurance policy that is custom tailored for the work that you perform.

It is nearly impossible for a client to understand all of the terms, conditions and exclusions that are listed in the policy (some of them are over 300 pages long). Some project owners will require specific endorsement forms (or their equivalent) to be included before offering you a project so it’s important to work with an insurance agent that is familiar with these requests.

You do not want to find yourself having paid thousands of dollars down for an insurance policy that took weeks to get only to be turned away by a project owner because your policy excludes something. Making matters worse, you find out that you cannot cancel your policy without paying earned premium and non-refundable fees.

Below is a list of common exclusions and endorsements and what they mean. We strongly recommend going over this list and comparing it to your policy. If any of these exclusions would put your business at risk, please let us know right away.

  • Asbestos

    No Coverage for exposures to asbestos, asbestos fiber, or any material containing asbestos or asbestos products, including without limitation, the costs of asbestos removal or damage while effecting such removal. Asbestos is a very common exclusion and usually must be waived via a specific endorsement.

  • Contractors Warranty

    This means that if you hire sub-contractors, you must get a certificate of insurance from them. As mentioned above, if you fail to get a certificate, the amount of your contract with the sub will be added to your payroll or gross receipts and you will be charged the corresponding premium for the increase. In other words, you will be responsible for the sub-contractor’s general liability.

  • Designated Work

    Claims arising from any classification or class code not listed on the declaration page of this policy. For example, you are a roofing contractor and you purchase a policy that states your company is classified as a painter contractor. Any claims will be denied because you were not classed correctly. It is therefore important to review your policy since some agents will try to find a cheaper policy just to earn your business.

  • Demolition

    To the surprise of some general contractors and even excavation contractors, some correctly classified general liability policies exclude damages that are caused by specific apparatus or any damage or adjacent properties. A sample of the exclusion language of one of the carriers can be found here. (save this file on my server)

  • Independent Contractors (CG2294/CG2295)

    Claims arising out of: The acts or omissions of independent contractors while working on behalf of any insured, or the negligent hiring or contracting, investigation, supervision, training, retention of any independent contractor for whom any insured is or ever was legally responsible and whose acts or omissions would be excluded. If you use subs, this exclusion can be a extremely detrimental to your operation.

  • Professional Liability

    Claims arising out of the rendering of or failure to render any professional services by you or any engineer, architect or surveyor who is either employed by you or Performing work on your behalf in such capacity.

  • Designated Work

    Professional services include: The preparing, approving, or failing to prepare or approve. Maps, shop drawings, opinions, reports, surveys, field orders, change orders or drawings; and Supervisory, inspection, architectural or engineering activities. For example, if you make a structural change without the architect’s approval, there is no coverage. (Very common exclusion)

  • Construction Management Errors

    * See Professional Liability

  • Claims In Progress

    * See Prior Claims

  • Known Losses

    * See Prior Claims

  • Roofing

    Some roofing exclusions are plain and simple. NO ROOFING. Some are not as strict so have to read the exclusion carefully. Some roofing exclusions say there is no coverage while the roof is under construction or repair. For example: You tore off a roof, since the weather forecast called for sunny skies you decide there is no need to cover the roof overnight. If it rains, there is no coverage. Some policies allow for incidental roofing during a remodel, for example. If you are a roofer that installs or repairs torch down type roofs, you need to make sure that your policy includes coverage for membrane (modified bitumen).

  • Lead

    Claims arising out of the actual or alleged presence or actual, alleged or threatened dispersal of lead, lead particles or products containing lead.

  • Earth Movement

    * See subsidence

  • Multi-Unit Residential

    Any work in connection with the pre-construction, construction, post-construction, reconstruction, exterior remodeling or repairs of any multi-unit residential building.

  • Apartments/Condos/ Townhouses/Tract Homes

    Any experienced contractor who works on these types of projects will know two facts: (1) the risk of facing a (class-action type) lawsuit and (2) the premium for their GL policy is significantly higher than for those contractors who only work on smaller, single family homes.

  • Employment Related Liability

    Please refer to our Employment Practice Liability Insurance page.

  • Prior Claims/ Known Losses/ Claims In Progress

    Claims that are in progress prior to the commencement of your current policy as well as damages and/or injuries that you were aware of when you purchased your policy.

  • Pesticide, Herbicide & Funicide Exclusion

    If you are a landscape contractor or otherwise use these types of products, you should carry a policy that doesn’t have this exclusion.

  • Pollution

    A provision in either first-party or third-party insurance policies that excludes coverage for losses caused by “pollution,” a term usually defined to mean an irritant or contaminant, whether in solid, liquid, or gaseous form, including—when they can be regarded as an irritant or contaminant—smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.

  • Prior Acts

    This is a very signifcant exclusion. This says that any work you did prior to the policy date is not covered. For contractors this can be devestating as a majority of clains claims arise months or years after project is complete.

  • Exterior Insulation & Finish System (EIFS) (Very Common)

    This is another exclusion that you need to pay close attention to. Exterior insulation and Finish system means the design, manufacture, construction, fabrication, preparation, installation, application, maintenance or repair, including remodeling, service, correction, or replacement, of an exterior insulation and finish system (commonly referred to as synthetic stucco) or any part thereof, or any substantially similar system or any part, including the application or use of conditioners, primers, accessories, flashing, coatings, caulking or sealants in connection with such a system when performed by you.

  • X, C, U

    Explosion, collapses, and underground. If you are a Grading or Excavation contractor you should not see this exclusion on your policy.

Coverage for All Types of Construction Risks

Construction businesses have complex risk management needs. We do not only offer General Liability but also commercial auto, umbrella/excess, workers compensation, as well as other insurance solutions including:

For larger construction businesses, we also offer specialty coverage:

  • Designer and contractor’s professional liability
  • Owners protective professional indemnity
  • Architects and engineer liability
  • Contractors environmental legal liability
  • Project cargo and marine delay in start up

Surety Bonds

  • We work with top rated (A XV) rated carriers
  • General & Specialty Trade Contractor License Bond
  • Electrical & Telecommunications Contractor License Bond
  • All activity codes and NVOCC bonds
  • Instant issue online for many types of bonds
  • Competitive rates

Construction bonds, also known as contract bonds, represent a type of surety bond. In a nutshell, they provide a financial assurance that the bills on a construction project will be paid. The issuing insurance company or bank guarantees the project’s completion by a specific contractor who holds the bond. The most common bonds are construction bonds which protect the assets of the project owner (or financer of a project) against careless or incomplete projects. There are three types of construction bonds: performance bonds, bid bonds, and payment bonds.

The illustration below explains the three parties and their relationships to each other in a common contractor/performance bond agreement.

Performance Bonds

In most cases, performance bonds are simply called contractor bonds. When a contractor claims that they are bonded, they refer to holding this type of bond. A contractor, or principal, uses a performance bond to guarantee that it will complete the contract in accordance with its terms. Generally speaking, all contractors need to be bonded in order to hold a specialty or general contractors license.

In Washington State, the minimum bond requirement for specialty contractors is $6,000. Click here to view the contractor specialty list in WA. For general contractors (or those who perform more than one type of contractor services) the minimum bond requirement is $12,000. If the principal defaults, the owner may call upon the surety to complete the contract. In such a case, the surety will have to hand the contract to a new contractor or pay the costs for the owner to complete the contract.

For more information on bond requirements in WA, please visit “How to Register as a Contractor

Bid Bonds

The bid bond protects the project’s owner if the bid is not honored by the principal, usually the contractor. The owner is the obligee under the bond and has the right to sue the principal and the surety (the issuer of the bond) to enforce the bond. If the principal refuses or is unable to honor the bid, the principal and the surety (the insurance company or bank issuer of the bond) are liable for any additional costs incurred in hiring a second time with a replacement contractor. Bid bonds are generally required for larger projects and ensure that only those contractors who are willing and able to perform the work at the bid amount will actually do so.

Payment Bonds

A payment bond guarantees all payments that are due to subcontractors and others from the principal. Beneficiaries of a payment bond are the subcontractors and suppliers.

Get A Free Surety Quote

Inland Marine Insurance

Inland Marine insurance in the construction industry is commonly called contractor’s equipment or installation floater. As a contractor or construction professional, your work often involves the transportation of tools, equipment, and supplies to and from your worksite. While those business assets are in motion, Inland Marine Insurance ensures their replacement should an accident, theft, or loss happen. It can also include tools, both large (i.e. cranes, bulldozers, etc.) and small (toolbox, jackhammer), that your construction or contracting crew takes with them when they perform a job.
We can quote and bind most inland marine policies in minutes. Inland Marine policies could provide coverage for things such as:

Coverage for Buildings (Builder’s Risk)
Stock
Business Property
Tools
Equipment (large & small)
Installation Floaters
Leased or Rented Equipment
EDP (electronic data) and more

If you aren’t sure how to protect something in your construction business, do not depend on a quick search online or what a fellow contractor suggests. Give us a call at 425-242-5252 to make sure your asset is protected correctly.

Get A Free Inland Marine (Equipment) Quote

Builders Risk

Builders Risk and Course of Construction provides coverages for Owner/Builders, Contractors and Developers building or remodeling residential and small commercial properties during the course of construction. Coverage may be extended to include existing buildings to which renovations are being made and/or additions to the buildings.

If you are a homeowner, your current home insurance policy may allow you to add a “Building under construction” endorsement. However, most home policies won’t allow such exposure and if they do, their coverage may not be as comprehensive as a builder’s risk policy.

It is important to keep in mind that it’s usually the property owner that is responsible for the actual building, even while a contractor is building it. So if, for example, a wind storm or vandalism damages or destroys the building, the contractor cannot be held liable and hence isn’t responsible to pay for the damages. Similarly, the contractor may also not be liable if someone trespasses and gets injured on the property under construction.

For brand new, ground-up, type projects, builders risk is usually purchased by the project owner and/or developer that hires a general contractor. As a contractor, you should strongly advise the owner to purchase a builder’s risk policy to not only make sure the right coverages are in place but also to make it clear what risks you are and are not responsible for.

D.O.K. INSURANCE AGENCY BUILDERS RISK HIGHLIGHTS

  • Competitive premiums from multiple carriers
  • Most (small to medium) size risks can be quoted and insured the same day
  • Larger risks are welcome
  • Replacement Cost Valuation included for new structures
  • New Construction, Renovation and Existing Structure coverages available
  • Extensions available and more
  • One to four family residential units OK
  • Brush Fire and Protection classes 8, 9, 10 OK
  • Earthquake and flood coverage available
  • Property in transit and temporary storage included in most programs
Get A Free Builders Risk Quote

Owners And Contractor’s Protective Liability (OCP)

Some projects require that independent or specialty contractors be hired get the project done. As a result, project owners may be held liable for the specialty contractor’s acts or omissions on their project. OCP coverage provides liability coverage for an insured who is sued because of negligent acts or omissions of an independent contractor or subcontractor, resulting in bodily injury and/or property damage to a third party.

OCP is generally purchased by the general contractor but it only lists the project owner as named insured. It is very important to note that OCP does not replace the need for a commercial general liability policy to include all parties that are working on the project. More importantly, as soon as the project is complete, OCP no longer provides coverage for things such as poor workmanship that results in a liability loss.

Get A Free OCP Quote

Environmental Liability

As mentioned in our Exclusions section above, pollution (aka environmental liability) is excluded in most commercial general liability policies. So, if your business involves the disposal of waste (i.e. demolition company transporting materials from torn down structure to facility), you should strongly consider purchasing this type of policy.

The general public is increasingly aware of companies’ (especially contractors’) responsibilities to protect the environment and manage the disposal of hazardous material. If potentially harmful chemicals are accidentally released into the air or contaminate the soil, contractors can be held liable for the resulting damages to the environment. These incidents can cost millions and have often ruined companies. As a result, many construction companies are now contractually required to provide proof of insurance packages that specifically list pollution coverage before they are hired to do a job.

D.O.K. INSURANCE AGENCY ENVIRONMENTAL LIABILITY HIGHLIGHTS

  • Contractors’ Environmental and Professional Coverage (CEPC)
  • $25 million or higher limit capacity
  • Project specific policies available
  • Blanket Additional Insured, Completed Ops; Primary Non-Contributory; Waiver o Subrogation
  • Transportation Liability including loading and unloading
  • Non-Owned Disposal site coverage
  • Contracting Operations Environmental Liability available on a claims-made or occurrence basis
  • Mold coverage available
  • Image Restoration
  • Illicit Abandonment
  • Owner Controlled Insurance Program (OCIP) and Contractor Controlled Insurance Program (CCIP) structures are available
  • Clean-up to “Environmental Professional” Standard

CONTRACTOR ENVIRONMENTAL AND PROFESSIONAL CLAIMS SCENARIOS

Professional Liability: $350,000

A general contractor sub-contracted masonry work for a warehouse project. The masonry sub-contractor did not construct the loading dock according to the design plans. The general contractor was accused of poor supervision and was held responsible for damages of $350,000 including costs to rebuild the loading dock.

Professional and Pollution Liability: $450,000

A construction manager oversaw the construction of an office building. He sub-contracted the design of the heating and ventilation systems to a mechanical contractor. The sub-contractor miscalculated the cooling needs of the building, which resulted in a $450,000 professional liability claim resulting in $450,000 in damages for replacement of the system, mold remediation, and relocation of the tenant during repairs.

Contractors Pollution Liability: $1.75M

A refrigeration contractor was hired to upgrade the refrigeration system of a cold storage warehouse. An ammonia leak was caused by the failure of a valve in the system. Seventeen neighbors were hospitalized and business operations were interrupted from the shutdown of the warehouse. The contractor incurred $1.75M in third party bodily injury, property damage and defense costs.

Professional Liability: $350,000

A contractor provided training on the proper use of equipment that he had installed at a manufacturing facility. A person was injured due to improper training on safety features of the unit. A claim was filed for bodily injury and lost wages in the amount of $350,000.

Get A Free Environmental Liability Quote

Wrap-Up Insurance

What is Wrap-Up Insurance?

Being in charge of a multi-million-dollar construction project can be stressful for all parties involved. Owners, developers, and contractors have to work together to make sure that the building process runs according to budget and time limitations. A wrap insurance policy gives you peace of mind knowing all participants in the project have the necessary insurance coverage to meet potential liability exposures.

Wrap-up insurance is a liability policy that provides an all-inclusive insurance package which protects all contractors and subcontractors working on a large project. There are two types of wrap-up insurance:

  1. Owner-controlled
  2. Contractor-controlled

The owner-controlled insurance program (OCIP) is obtained by the owner on behalf of the builder and/or contractor. Included in the insurance are usually general liability, excess liability, workers compensation (where applicable), pollution liability, professional liability, builder’s risk, and railroad protective liability (where applicable). The premium for wrap-up insurance can be expensive. However, it can also be divided among general contractors and sub-contractors, thus spreading the cost.

BENEFITS OF WRAP INSURANCE OVER CONVENTIONAL POLICIES

  • Sub-contractors are covered for multi-family construction projects, which may be excluded on the individual subcontractor’s policy.
  • There is no need to assign responsibility for third-party liability or property damage, since all insured parties are on listed as named insureds on same policy.
  • This coverage can expedite the claim handling process, which leads to lower potential legal claims costs for owners, contractors and subcontractors.
  • It can be a great way to save on project specific premiums if each party purchases different policies separately.
Get A Free Wrap-Up Quote

DOK Insurance Construction Insurance Highlights

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Get A Free Surety Quote

Exclusions To Your Contractor General Liability Policy

  • Multiple carriers for all lines of your insurance needs
  • We have markets/carriers for any contractor exposure handyman start-ups to national construction empires
  • Tract homes, high-rise, HOA projects accepted
  • Ability to cover large projects
  • Capacity to offer Frame Construction
  • Scaffolding and Construction Forms coverage available
  • Pollutant Clean Up and Removal coverage available
  • Removal of subsidence exclusion
  • Flood and Earthquake coverage available
Get A Free Surety Quote

Exclusions To Your Contractor General Liability Policy

  • Multiple carriers for all lines of your insurance needs
  • We have markets/carriers for any contractor exposure handyman start-ups to national construction empires
  • Tract homes, high-rise, HOA projects accepted
  • Ability to cover large projects
  • Capacity to offer Frame Construction
  • Scaffolding and Construction Forms coverage available
  • Pollutant Clean Up and Removal coverage available
  • Removal of subsidence exclusion
  • Flood and Earthquake coverage available
Get A Free Surety Quote

Five Sample Text General Liability Policy

  • Multiple carriers for all lines of your insurance needs
  • We have markets/carriers for any contractor exposure handyman start-ups to national construction empires
  • Tract homes, high-rise, HOA projects accepted
  • Ability to cover large projects
  • Capacity to offer Frame Construction
  • Scaffolding and Construction Forms coverage available
  • Pollutant Clean Up and Removal coverage available
  • Removal of subsidence exclusion
  • Flood and Earthquake coverage available
Get A Free Surety Quote

Six Sample Text General Liability Policy

  • Multiple carriers for all lines of your insurance needs
  • We have markets/carriers for any contractor exposure handyman start-ups to national construction empires
  • Tract homes, high-rise, HOA projects accepted
  • Ability to cover large projects
  • Capacity to offer Frame Construction
  • Scaffolding and Construction Forms coverage available
  • Pollutant Clean Up and Removal coverage available
  • Removal of subsidence exclusion
  • Flood and Earthquake coverage available
Get A Free Surety Quote

Seven Sample Text General Liability Policy

  • Multiple carriers for all lines of your insurance needs
  • We have markets/carriers for any contractor exposure handyman start-ups to national construction empires
  • Tract homes, high-rise, HOA projects accepted
  • Ability to cover large projects
  • Capacity to offer Frame Construction
  • Scaffolding and Construction Forms coverage available
  • Pollutant Clean Up and Removal coverage available
  • Removal of subsidence exclusion
  • Flood and Earthquake coverage available
Get A Free Surety Quote

Eight Sample Text General Liability Policy

  • Multiple carriers for all lines of your insurance needs
  • We have markets/carriers for any contractor exposure handyman start-ups to national construction empires
  • Tract homes, high-rise, HOA projects accepted
  • Ability to cover large projects
  • Capacity to offer Frame Construction
  • Scaffolding and Construction Forms coverage available
  • Pollutant Clean Up and Removal coverage available
  • Removal of subsidence exclusion
  • Flood and Earthquake coverage available
Get A Free Surety Quote

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