4 Types of Insurance Your Construction Business Needs

1. Contract Works Insurance

Perils such as fire, hail, lightning, floods, theft and vandalism can lead to costly damages on a building site. Contract Works insurance provides coverage against damage to buildings whilst under construction. The policy may also cover the materials you're using for the construction work. 

Your client, who is the property owner, can purchase Contract Works insurance to insure their property. However, as an interested party in the project, you should also insure business-related items such as materials, supplies, machinery and equipment on the site. You can also modify your policy to cover the following, often-excluded items and risks:

• Scaffolding and other temporary structures
• Supplies on the site from theft
• Materials in transit

Contract Works insurance can offer temporary coverage which expires on completion of the project. Alternatively, you can take out annual Contract Works insurance which covers all projects during a 12-month period. 

2. Tools of Trade insurance

Construction jobs require various equipment and pieces of machinery, and these may not be covered under your Contract Works policy. Equipment is expensive, and any damages incurred may cost a lot of money to repair. Tools of Trade insurance covers all equipment and machinery in a contractor’s possession. This is a broad policy, and it covers:

• Loss of or damage to heavy equipment such as cranes, trucks, forklifts, compressors, trailers and excavators
• Loss of or damage to small tools and equipment such as power saws, drills, wheelbarrows, concrete mixers and generators
• Employee equipment and clothing
• Debris removal and site cleanup after the occurrence of an insured risk

This policy can cover both owned and rented equipment. Insurable risks include fire, theft, vandalism and floods.

3. Workers Compensation insurance

A good number of people are injured at their place of work every year. Without the right insurance coverage, your business may pay for damages resulting from employee injuries (in addition to potential fines for not having Workers Compensation cover in place). In Australia, any business who employs workers, MUST have Workers Compensation insurance. This policy provides medical benefits and wage replacement to employees injured on the job. 

Construction businesses usually work with various types of people, some of whom are contractors and sub-contractors. According to the Workers Compensation and Injury Management Act, a person who has an employee-employer relationship with you is eligible for compensation. Talk to an insurance professional to help you figure out how much workers comp coverage you need.

4. Professional Indemnity insurance

Mistakes happen on the job, and in the construction industry, these mishaps can mean huge losses. For example, your contractors and sub-contractors may make errors when executing the building plans. If a client successfully sues your small business, you may be liable for all of the damages owed. You can protect your business from the financial implication of such lawsuits by taking out a Professional Indemnity policy.

This policy covers mistakes and errors made by you, your contractor or sub-contractors during the construction work. Note that this policy only covers work completed by your business or by sub-contractors and third parties hired by your business. You must be providing a professional service in order to qualify for Professional Indemnity insurance.

Running a construction company requires covering all of the risks that your business may be exposed to during each project. At Westralian Insurance, we specialise in tailoring insurance solutions for businesses. Contact us today for a chat about your business.