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Business Toolbox Tip #6: 3 Important Insurance Coverages for Your Construction Company

The Problem: Insurance coverage for your construction company is expensive.  Which lines are most important?

The Zone – Zone 2: Insurance and Risk Management

You have done your homework.  Your dream of owning your own construction company is well on its way to becoming a reality.  News of your startup is spreading among family and friends.  Opportunities to contract work are starting to come in.

Now you need to address a key aspect of the startup process – insurance coverage. If your state that you have your company based in requires licensing, you most likely already have purchased insurance or are at least aware of the insurance requirements needed to get your license. But there are states that do not require certain trades to be licensed.  So you may have overlooked this process.

Contractor Insurance

Insurance for your construction company is major component of doing business. When you go into business, the first thing that you will realize is that there is no such thing as a risk free business.  Every business has some element of risk.  As a business owner, you work to minimize the sources of risk.  But, it gets to a point where you cannot eliminate all sources of risk in your construction company.

Once you reach the point where you cannot eliminate the risk any further, you need to insure the risk that remains.  There are a good deal of insurance coverages that are available to construction company owners.

In order to make sure that your company is adequately protected, you need to work with a licensed professional insurance broker or agent.

3 Important Insurance Coverages for Your Construction Company are:

  1. Workers Compensation Insurance – workers compensation insurance provides coverage for your employees if they are injured on the job.  In almost all situations, this coverage is mandated by law.  Check with your insurance agent about coverages that are required in your state.
  2. General Liability Insurance – general liability – or GL coverage – offer coverages for liabilities that are created in the course of completing a project or after the project is completed. Every GL policy is slightly different based on your state, your trade and your carrier.  These policies may cover issues involving property damage or other non-worker related incidents.
  3. Auto Liability Insurance – this coverage is also mandated by law. This provides coverage for your automobiles associated with your business.


There are a lot of other different types of coverages that are available to contractors.  Depending on your unique situation, certain coverages may be necessary or at a minimum a good idea to consider.

It is always recommended that you speak with a licensed insurance professional about coverages for your business.  I am not an insurance professional.  My recommendations here are based on my experience as a professional contractor.

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