Construction projects are intrinsically complex, involving various risks, numerous stakeholders, and the potential for unforeseen challenges. One of the most crucial defenses a business owner can have against risks associated with these is construction insurance. As the backbone of construction risk management, this plays a significant role in safeguarding projects, businesses, and owners from devastating financial losses.
In this guide, we’ll provide a comprehensive guide to construction insurance Florida. We’ll explore what coverages it offers, how much it costs, and factors affecting premiums.
What is Construction Insurance?
Construction insurance, also known as builder’s risk insurance or construction risk insurance, is a broad categorization of policies that offer protection during construction projects. It is essential to protect individuals and businesses against various risks and liabilities that may cause potential financial setbacks during a construction project. It also helps ensure the successful completion of construction endeavors.
What Policies are Required for General Contractors in Florida?
Florida general contractors are often required to hold several different policies depending on the specifics of their work. One of the common legally required policies is worker’s compensation insurance, which covers medical bills and lost wages in case of injury in the workplace. If your business owns a vehicle, you’ll also be required to purchase commercial auto insurance.
Failure to meet these insurance requirements can result in hefty fines or suspension of your contractor’s license, effectively halting your business and all operations.
Types of Construction Insurance
The types of policies contractors, project owners, and other stakeholders need can vary depending on the project and client contracts. Here are a few of the most common policies under construction insurance:
Builders Risk Insurance
Builders risk insurance provides coverage for buildings and other structures such as machinery, scaffolding, fencing, paving, lawns, trees, and other fixtures installed by the builder while construction is ongoing.
Insurance providers often cover the most common types of construction projects including:
- New residential construction
- Residential remodeling or smaller projects
- Commercial property construction
- Model home construction
For unique projects, specialty providers can offer insurance policies that match the needs of the project and its contract.
The most basic builders risk insurance will cover fire, weather, theft, or vandalism-related damages. To extend coverage limits to include items such as damages from earthquakes or floods, many insurers will provide “premium coverage” options or bundles.
General Liability Insurance
Before Florida contractors can get licensed, they need to get general liability insurance. This serves as the foundation of their general contractors protection, which provides coverage against bodily injury, property damage, or personal injury during construction. This can help protect you against legal or financial consequences arising from these risks.
Professional Liability Insurance
Also known as errors and omissions insurance, this type of insurance protects businesses against claims arising from mistakes or errors in their work. For instance, when the contractor is sued for missing a deadline or for a calculation mistake that resulted in costly repairs, this policy will cover the claim.
Commercial Auto Insurance
This policy isn’t exclusive for construction projects, but for all businesses that use vehicles for commercial purposes. It’s intended to help policyholders avoid medical expenses, high vehicle repair costs, or lawsuits resulting from auto accidents.
Commercial truck insurance, which falls under the umbrella of this policy, is commonly useful for contractors given the type of vehicles needed in construction sites. This policy specifically applies to large vehicles such as dump trucks, cement mixers, tractors, and the like. It also offers coverage for cargo, downtime, and general liability among others.
Workers’ Compensation Insurance
This policy is also required for contractors to get their license and is designed to protect them when their employees are injured on the job. It covers the following costs after the incident:
- Medical expenses
- Missed wages
- Funeral costs and death benefits
- Legal fees when the injured person sues the contractor
- Ongoing recovery costs related to the injury
Contractor License Bonds
Similar to insurance policies, this agreement guarantees that a contractor will comply with the regulations that apply to their contractor license. While the contractor is the one who purchases the bond, it’s designed to protect the general public and anyone the contractor does business with from poor workmanship or code violations.
Construction Bonds
These bonds guarantee that certain aspects of the contract or project are adhered to, as well as the overall completion of the project. There are certain types including performance bonds, payment bonds, maintenance bonds, supply bonds, and site improvement bonds.
Inland Marine Insurance
This policy covers losses that occur in the transportation process of tools, materials, and equipment, extending beyond standard property insurance.
How Much is Construction Insurance in Florida?
The average cost of construction general liability insurance is $142 per month. On the other hand, worker’s compensation insurance averages $318 per month while commercial auto insurance costs an average of $180 per month. Take note, these numbers as well as the prices of other policies can still change based on a variety of factors including the following:
- Type of Project: The nature and complexity of the project significantly affect insurance costs. Bigger, high-risk projects tend to have higher insurance premiums.
- Project Value: The total value of the project, including labor, material, and equipment will affect premium costs. Contractors dealing with higher-value projects can also expect higher premiums.
- Location: The geographical location of the project is a significant factor insurers take into consideration. Projects in areas prone to natural disasters, adverse weather conditions, or high crime rates may incur higher premiums.
- Type of Coverage and Policy Limits: The specific policy limits and coverage options you select also influence premium costs. Balancing comprehensive coverage with reasonable policy limits ensures adequate protection without overly expensive premiums.
- Company’s Safety Record: One of the elements insurance providers assess when determining premiums is the company’s safety record. Implementing robust safety measures and protocols and maintaining a strong safety culture can positively impact insurance costs over the long term.
- Claims History: Companies with a history of frequent claims may face higher insurance premiums due to observed higher risk.
The Bottomline
Having construction insurance in Florida is not just a formality but a lifeline protecting your business from unexpected liabilities. Securing the proper policies for your specific project such as worker’s compensation insurance or commercial truck insurance will not only shield your bottom line but also help build trust with your clients.
Protect your business now with F&N Insurance Group’s comprehensive and tailored construction insurance. Talk to one of our agents today and let them guide you in selecting the appropriate policies for your business at the best rates. Contact us now!