Construction General Liability Insurance: Everything You Need to Know

Construction is a lucrative business, but it comes with its share of risks. Accidents, natural disasters, and unforeseen circumstances can occur at any time, causing damage to property or injuring people on your job site. This is where construction general liability insurance comes in – it protects your business from the financial consequences of such events. In this article, we’ll discuss everything you need to know about construction general liability insurance.

What is Construction General Liability Insurance?

Construction general liability insurance, also known as CGL insurance, is a type of insurance policy that protects your construction business from financial losses due to property damage or bodily injury caused by your operations, products, or completed work. It covers a broad range of risks, such as:

Construction general liability insurance typically covers legal defense costs as well, even if the claims against your business are groundless. It is often a requirement for contractors bidding on projects, as it demonstrates financial responsibility and gives peace of mind to project owners.

Why Do You Need Construction General Liability Insurance?

Construction is a high-risk business, and accidents can happen on any job site, no matter how careful you are. Even if you have safety measures in place and follow all regulations, incidents such as slip and falls, property damage, or accidents involving heavy machinery can still occur. Construction general liability insurance provides financial protection against these risks and helps your business stay afloat in case of a lawsuit or claim.

Furthermore, many construction projects require contractors to have general liability insurance as a condition of the contract. Without it, you may not be able to bid on profitable projects, losing out on potential revenue.

What Does Construction General Liability Insurance Cover?

Construction general liability insurance provides coverage for a wide range of risks related to your business operations. Here are some of the typical coverages:

Bodily Injury and Property Damage Liability

The most basic coverage provided by construction general liability insurance is bodily injury and property damage liability protection. It covers third-party injury and damage to property caused by your business operations, products, or completed work. If someone is injured on your job site or property is damaged due to your negligence, this coverage will pay for the damages and legal fees if you’re sued.

Products Liability Coverage

If your construction business produces or sells products, such as building materials or equipment, products liability coverage is essential. It protects your business from claims related to injury or damage caused by the products you sell or supply.

Completed Operations Liability Coverage

This coverage protects your business from claims related to work you’ve completed in the past. If a completed project causes bodily injury or property damage, this coverage provides protection even after the job is done.

Pollution Liability Coverage

If your construction business involves activities that can pollute the environment, such as excavation or demolition, pollution liability coverage is a must-have. It provides protection against claims related to pollution, such as soil or water contamination.

How Much Does Construction General Liability Insurance Cost?

The cost of construction general liability insurance varies depending on a few factors, such as the size of your business, the types of projects you work on, and the coverage limits you choose. Generally, smaller construction businesses can expect to pay a lower premium than larger businesses.

The cost of the premium is also affected by the deductible you choose. A higher deductible will result in a lower premium, but you’ll have to pay more out of pocket if you have a claim. It’s essential to strike a balance between a premium you can afford and a deductible you can comfortably pay if something goes wrong.

FAQ

What is the difference between occurrence and claims-made coverage?

Occurrence coverage provides protection for claims that occur during the policy period, no matter when the claim is reported or filed. Claims-made coverage, on the other hand, provides protection for claims that are reported or filed during the policy period, regardless of when the incident occurred. Occurrence coverage tends to be more expensive, but it provides broader protection, while claims-made coverage offers more control over premiums and coverage.

What is the difference between general liability and professional liability insurance?

General liability insurance covers bodily injury and property damage caused by your business operations, products, or completed work. Professional liability insurance, also known as errors and omissions insurance, covers claims related to professional mistakes or omissions that result in financial harm to a third party. If your construction business provides design or consulting services, you may need both types of coverage.

What are the common exclusions of construction general liability insurance?

Common exclusions of construction general liability insurance include damage caused by intentional acts, damage to your own property, injuries to employees, and automobile accidents. It’s essential to read your policy carefully and understand the exclusions to ensure you have the coverage you need.

Is construction general liability insurance the only type of insurance a contractor needs?

No, construction general liability insurance is just one type of insurance a contractor may need. Depending on the nature of the business, there may be other types of insurance policies required or recommended, such as workers’ compensation, professional liability, or commercial auto insurance. It’s essential to evaluate your business’s needs and risks and consult with an insurance professional to determine the right coverage.

How can I lower my construction general liability insurance premiums?

There are several ways to lower your construction general liability insurance premiums. One way is to increase your deductible, which will result in a lower premium. Another way is to implement risk management strategies, such as safety programs or training, which can reduce the likelihood of claims. Finally, shopping around and comparing quotes from multiple insurers can help you find the best coverage and rates for your business.

Conclusion

Construction general liability insurance is a crucial coverage for any construction business that wants to protect its assets and reputation. It provides broad protection against a wide range of risks, such as property damage, bodily injury, and completed operations liability. Understanding your coverage needs, shopping around for the best rates, and implementing risk management strategies can help you find the right insurance policy for your construction business.