3 Contractor Insurance Policies You Should Know About

19
March 2019
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You've already got general liability, workers’ comp, and commercial auto policies in place to protect your construction business against financial losses.

You’re off to a great start, but that’s not where comprehensive coverage ends.

There are 3 more contractor policies that could really protect your construction business. Find out if one of them could really protect your assets.

Cyber Liability Insurance

“Cyber liability? That’s not for me.”

Or is it?

Remember the Target hack that occured in 2018? Roughly 40 million credit cards were stolen as well as the personal information of about 70 million customers. The breach cost Target an estimated $420 million in costs and resulted in a 3-4% drop in sales in the aftermath.

The hackers gained access to Target’s network by first stealing credentials from a third party heating and ventilation company.

That’s right- a HVAC company may have been the weak link in one of the biggest corporate hacks in recent history.

It’s no secret that cyber crime is on the rise.

But it’s not just billion dollar companies coming under attack from cyber criminals.

According to the 2018 Hiscox Small Business Cyber Risk report 47% of small businesses suffered at least one cyber attack in the previous 12 months.

And the construction industry is no exception.

While it may seem like your construction business is at little risk of being targeted by cyber criminals, that is not the case.

Criminals will hack your computer systems to steal:

  • customer information
  • blueprints
  • project plans
  • trade secrets
  • employee information
  • financials/ payroll
  • vendor and third-party data

But why?

There could be many different reasons for a hacker to target you, including industrial espionage, simple thievery, or access to client information.

Or sometimes they just want to take down your business operations by maliciously attacking computer or network systems.

Your construction business can suffer extensive financial losses if you fall victim to a cyber attack, including costs for:

  • Systems restoration
  • Business interruption
  • Electronic data restoration
  • PR and reputation management

And you’re unlikely to be alone in the losses.

It’s not uncommon for third-party information – client or employee personal data – to be stolen during a cyber attack. Following a cyber event, it is your business’ responsibility to both notify all customers of the breach and provide them with credit monitoring services, neither of which are cheap.

And, if a third-party believes you failed to take the proper steps to protect their information, you could be facing a lawsuit.

But don’t worry – cyber liability insurance can help.

Coverage for both your losses and third-party costs, cyber liability will help pay for the many losses that come along with a cyber attack.

Cyber criminals might be invisible to you, but your aren’t to them. Don’t leave yourself vulnerable to cyber attack – be sure your business is protected with cyber liability coverage.

Contractor Pollution Liability

Maybe you’re thinking concerns about pollution liability don’t really apply to your construction business.

Think again.

Some real-life examples of what pollution liability can look like include:

  • While wood stripping and refinishing , a flooring contractor inadvertently emitted fumes that led to a $138K claim for both property damage and bodily injury.
  • Accidentally puncturing a benzene pipeline with a backhoe, a pipeline contractor caused hundreds of gallons of benzene to saturate the soil, leading to an almost million dollar claim.
  • Applying epoxy sealant in an office building, a concrete contractor accidentally caused fumes that traveled throughout the building, which led to evacuation, business interruption, and a $190K claim.

Now you might be thinking that these sound like problems that your general liability insurance will cover. But this mistaken assumption could end up costing you.

While general liability coverage exists to protect you from claims for bodily injury or property damage as a result of your work, these policies typically contain certain exclusions.

And one of the more common exclusions in a general liability policy is a total pollution exclusion clause: excluding both bodily injury and property damage that arise from a pollutant being released.

Also, nowhere in your GL policy will you find coverage for the kind of remediation or clean-up associated with a pollution claim, both of which can cost a lot.

A pollution liability policy protects contractors from having to pay out for pollution conditions caused by either their work or work performed by subcontractors on their behalf.

Pollution liability typically covers:

  • property damage
  • bodily injury
  • expenses for investigating, settling, or defending a pollution claim.
  • cleanup costs for removal, neutralization, and restoration of damaged property

In some instances, pollution liability even covers emergency response and crisis management expenses.

With the egregious price tag that can be attached to a pollution claim, be sure that your construction business is covered with a pollution liability policy.

Inland Marine

You weren’t built for an office job.

You like being outside and in motion – that’s why you chose the construction industry in the first place.

When you’re on the move from one job site to the next, you’re in your happy place.

But what about the tools and equipment that are on the go with you?

What if they are lost, stolen, or intentionally damaged? Can you afford to replace them?

An inland marine policy will help cover the costs for tool and equipment losses that occur both while in transit and on the job site.

Properties that inland marine insurance covers:

  • Mobile property, such as tools and equipment that move from one job site to the next.
  • Property in transit, like goods that are being transported or shipped.

Losses that inland marine covers include:

Loss
With all the movement between job sites in the construction industry, it is not uncommon for tools to get misplaced, never to be seen again.

Theft
With low risk and high reward, thieves often go after contractor heavy equipment. Hard to track and easy to sell, heavy equipment is in constant danger of being taken from a job site.

Damage
In a high-risk industry like construction, accidents can – and will – happen. Sometimes those accidents happen to tools and equipment that are in transit.

Vandals
Seeing an unguarded construction site at night as the perfect opportunity to wreak havoc, vandals can do a lot of damage in a short amount of time.

Inland marine coverage for losses applies to materials, supplies, tools, and equipment that are in transit or on a job site at the time of the loss.

Don’t leave yourself vulnerable to financial loss due to lost, stolen, or intentionally damages the tools and equipment that are working hard for you. Protect your business with an inland marine policy.

Once you’ve got your cornerstone contractor insurance policies in place, make sure you round out your coverage and protect you construction business with cyber liability, pollution liability, and inland marine coverage.

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