Construction projects, whether big or small, come with their fair share of risks. From property damage to bodily injuries, unforeseen mishaps can occur at any stage of the construction process. That’s why construction companies, contractors, and even property owners invest in construction liability insurance to safeguard themselves from potential financial losses due to construction-related accidents.
- Types of Construction Liability Insurance
- Understanding Policy Coverage and Limitations
- Legal Requirements and Recommendations for Contractors
Imagine facing a lawsuit for an accident on your construction site without any insurance backup. The financial burden could be devastating, potentially derailing the entire project and putting the future of your business at risk. Construction liability insurance acts as a shield, covering costs associated with such unfortunate events.
Let our competent Muskegon construction attorney walk you through the different types of construction liability insurance, as well as the coverage of each policy, helping you make an informed decision on which insurance option best suits your construction needs.
Types of Construction Liability Insurance
Here are the different types of construction liability insurance and the specific benefits they offer:
General Liability Insurance
General liability insurance is like a safety net for construction companies. It typically covers third-party bodily injury, property damage, and personal injury claims. For example, if a visitor slips and falls on your construction site or if your work causes damage to a neighboring property, general liability insurance can help cover the costs of legal fees, medical expenses, and property repairs.
Builder’s Risk Insurance
Builder’s risk insurance, also known as construction risk insurance, protects the actual construction project itself rather than just the people involved. It can include coverage for damages to the building under construction, materials, equipment, and fixtures caused by risks like fire, theft, vandalism, and certain weather events. Lenders and property owners often require builder’s risk insurance before financing or commencing construction.
Professional Liability Insurance
Also known as errors and omissions insurance, professional liability insurance is essential for construction professionals who provide design, consultation, or advisory services. It protects against claims of negligence, errors, or omissions in professional work. For instance, if a design flaw leads to delays or cost overruns, professional liability insurance can cover legal defense costs and potential damages.
Workers’ Compensation Insurance
Construction sites are inherently risky environments, and accidents involving workers can happen despite safety measures. Workers’ compensation insurance provides financial protection for employees who suffer work-related injuries or illnesses. It covers medical expenses, lost wages, rehabilitation costs, and even death benefits for dependents in the unfortunate event of a fatality.
Understanding Policy Coverage and Limitations
Generally, construction liability insurance provides coverage for:
-
- Property Damage. Construction liability insurance often covers damages to the property being worked on, including any accidental damage caused to the structure or surrounding property during the construction process.
- Bodily Injury. If someone is injured on the construction site, whether it’s a worker, visitor, or passerby, construction insurance typically covers medical expenses, including hospital bills, surgeries, medication, rehabilitation, and other necessary medical care.
- Legal Expenses. In the event of a lawsuit related to construction accidents, construction insurance policies often include coverage for legal expenses, such as the cost of hiring a lawyer specializing in construction accident law to defend you in court and settlements or judgments against your business.
While construction liability insurance is broad, it doesn’t cover everything. Common exclusions and limitations include:
-
- Intentional Acts. Construction liability insurance is generally designed to cover accidents, not deliberate wrongdoing or willful negligence. If you intentionally cause damage or injury, don’t expect your insurance to bail you out.
- Contractual Disputes. Insurance policies usually do not cover disputes arising from contractual obligations between parties involved in the construction project, including disputes over payment, project delays, or breaches of contract.
- Environmental Hazards. Most standard construction insurance policies exclude coverage for environmental hazards, such as pollution or contamination. Separate environmental liability insurance may be required for such risks.
Legal Requirements and Recommendations for Contractors
In Michigan, certain types of construction insurance are mandatory to protect both the construction professionals and others involved in their projects. Construction insurance ensures that if something goes wrong on a construction site, there is financial backing to handle claims.
For instance, if you have employees, you are required to have workers’ compensation insurance, which covers medical expenses and lost wages in case of work-related injuries or illnesses. Under the Michigan Worker’s Disability Compensation Act, insurance policies related to workers’ compensation workers’ compensation must include specific provisions, such as:
-
- Compensation for workers
- Rehabilitation services for injured workers
- Provision of medical, surgical, and hospital services
- Coverage for funeral expenses in case of death due to work-related incidents
Depending on the nature of the construction project and the parties involved, additional insurance coverage may be necessary. In large-scale projects, for example, umbrella liability insurance can extend your coverage limits, providing additional protection in case of substantial claims that exceed the limits of your primary insurance policies.
Given the complexities of insurance requirements and regulations in the construction industry, it’s best to seek guidance from legal experts. A local Muskegon construction attorney can help you understand and comply with the legal requirements for construction liability insurance, as well as navigate any legal issues that may arise during construction projects.
Avoid Complexity and Ambiguity With a Muskegon Construction Attorney
If you’re involved in the construction industry and want to ensure that you’re fully protected, Bowen Law stands ready to assist you. Our experienced Muskegon construction attorneys are well-versed in construction law and can provide the legal guidance you need.
Whether you seek clarification on policy coverage, assistance with claims, or advice on contractual matters, we’re here to offer you tailored, effective legal solutions. Don’t let legal issues stall your construction plans. Contact Bowen Law today at (231) 726-4484 or here for dependable, comprehensive legal support.