The Diligent Contractor: General Steps to Obtain Proper Insurance Coverage
A statement that oftentimes circulates within the construction trades is that a contractor’s job is never done. Of course, when one considers a construction project, that cliché necessarily is true.
Another reality is that a contractor has a great deal of business to tend to before a shovel ever hits the dirt. This includes making certain that appropriate construction insurance is obtained for a project. Obtaining appropriate insurance coverage for a specific construction project is not just a matter of filling out applications. Rather, it requires a contractor to undertake a considerable amount of work before ever submitting applications for insurance companies for needed coverage for a particular project.
One a contractor has undertaken planning and appropriate due diligence, the time arrives to more forward to seek suitable insurance coverage. There are insurance professionals, typically brokers, that specialize in assisting construction contractors in finding the right array of insurance for a particular project.
Proper Licenses in Place All Around
In advance of seeking insurance coverage, of different types, to fully cover a construction project, a contractor needs to affirm that all affiliated sub-contractors have their own licensed duly in force and up to date. The reality is that sub-contractors really on frontline operators on a construction project. Thus, their own houses must be fully be in order before a proper risk assessment can be undertaken by an insurance company in regard to a multifaceted construction project.
All Required Permits Obtained
Before embarking on seeking insurance coverage for all aspects of a construction project, a contractor should be certain to ensure that all permits needed are applied for and approved. Oftentimes, a contractor will begin seeking insurance coverage before all permit requirements have been satisfied. The thought at the outset is that by dual-tracking these issues, the whole pre-construction process will be sped up. In fact, the exact opposite typically proves to be the case.
Depending on the type of coverage sought from a particular insurer, that company is likely to require proof that all proper permits have not only been applied for but approved an in hand. When an insurance company assumes a risk by extending policy coverage, that insurer is going to insist that a contractor is fully in compliance with all aspects of a construction project.
Reliable Material Suppliers
The overall due diligence efforts by a contractor in the process of obtaining insurance for a construction project includes ensuring that reliable, reputable material suppliers are on board for a project. The liability a contractor faces if inadequate material was not used on a project can be tremendous.
By way of example, assume a construction project calls for steel pipe. Before seeking insurance coverage, a contractor must ensure that a reliable, reputable steel supplier like Federal Steel Supply, Inc., is associated with the project. While there are never guarantees that something or another might go wrong with a construction project, a contractor significant lessens the risk by contracting with only reliable material suppliers like, Federal Street Supply.
As an aside, a contractor needs to verify all aspects of an owner’s specs provided for a project. For example, a contractor needs to confirm that the specs properly denote that steel pipe is to be used on the project.
All Insurable Risks Identified by Contractor
A key step that a contractor must take in advance of applying for insurance for a project is making sure that all insurable risks have been identified. In layperson’s terms, that means a contractor needs to identify all possible exposures when it comes to a specific construction project and then make certain that appropriate insurance coverage is sought and obtained.
The types of insurance needed for a particular construction project can prove to be relatively extensive. Broadly speaking, the types of insurance a contractor needs to seek for a specific construction project can include coverage for material, onsite risks, natural disasters, employees, and even the contractor’s business itself. Liability insurance is going to be necessary to cover third parties who might somehow be injured by coming into close proximity to a construction site. Having said this, the insurance needs and demands of every individual project are unique. Therefore, what was required for a project in the past may not be appropriate or suitable for the current project a construction contractor is planning to undertake today. While history can be illustrative of possible insurance needs for a new project, history is not definitive when it comes to ensuring that a contractor has obtained appropriate coverage for the project at hand
Jessica Kane is a professional blogger who writes for Federal Steel Supply, Inc., a leading steel tubing suppliers of carbon, alloy and stainless steel pipe, tubes, fittings and flanges.