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

• 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.

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.

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

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.

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

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.