How to insure a construction business - NJ

The construction business doesn’t just involve hard hats, it also runs on plenty of hard work. With such high-risk operations and hazardous equipment playing a major role every day, it’s important for construction teams to be equipped with the right protection. Working with a New Jersey independent insurance agent is the best way to get set up with the proper coverage. But first, here’s a closer look at construction business insurance and why it’s so important.

What Is Construction Business Insurance?

Similar to all other areas of the country, construction business insurance in New Jersey is essentially a special type of business insurance customized to protect owners of construction businesses. The agreement between the insurance company and the construction business states that the insurer will cover financial losses that befall the business.

Of course, only specific perils stated in the policy will be covered by the insurance company. Construction business policies in New Jersey come with a list of specified non-covered perils as well. A New Jersey independent insurance agent can extensively review available policies with you to ensure that you get set up with the right coverage that does exactly what you need it to.

How to Insure Your Construction Business in New Jersey

The thing about construction business coverage is that one policy won’t work for every construction business or every business owner. With the help of your agent, you’ll work together to assemble a package of different coverages to protect yourself and your business against risks unique to you. Construction business insurance is designed to keep your business afloat following a huge disaster, such as property destruction, theft, or lawsuits.

Your New Jersey independent insurance agent will help identify the right types of coverage for you as they learn more about your specific construction business and its operations. Since construction business insurance is so customizable, you’ll be able to work together to build a policy that fits not only your business’s needs, but also the needs of your bank account.

What Does Construction Business Insurance Cover in New Jersey?

Construction business insurance is set up to protect business owners against potential threats. This includes construction businesses in New Jersey. Your policy will include the basics of business insurance coverage with several specific coverages tailored to your unique business added on. The more risks involved in your business, the more coverage you’ll need. But here are a handful of commonly selected coverages in construction business insurance packages to start.

Your construction business insurance package can be assembled from a combination of the following coverages available in New Jersey:

  • General liability: This coverage protects you against property damage or injury claims made by a third party. 
  • Workers’ compensation: If your employees become ill, get injured, or die from a work-related incident, this aspect of the insurance will cover the financial ramifications. This coverage is mandatory in New Jersey. 
  • Property Insurance: Covers loss of or damage to your physical property including your construction business and often its equipment and tools. Protected mishaps include fires, storms, and more.
  • Commercial/business auto: Provides protection for any company vehicles against things like theft, vandalism, and damage from natural disasters.
  • Employment practices liability: Covers fees for lawyers and other financial ramifications if any of your employees are involved in harassment cases against coworkers or third parties.
  • Equipment coverage: Many contractors have valuable equipment that needs to be protected. Coverage protects equipment from things like theft, vandalism, collapse, etc.
  • Pollution liability: Covers damage caused to third parties by any toxic pollutants used by your construction workers, including paint, fuel, solvents, heavy-duty glues, etc.
  • Installation floater coverage: Until building materials are fully installed, they technically still belong to the contractor. This coverage protects materials (e.g., roofing materials, AC units, etc.) that have to be transported by construction workers until installation is complete.
  • Extra expense coverage: Covers fees that arise unexpectedly, such as renting a temporary storage unit if the construction business’s office building burns down.
  • Professional liability: Also known as "errors and omissions insurance," this coverage protects against claims made by clients who have suffered financial loss due to the work they've hired you for. If a construction job gets botched and has to be redone, associated costs can be huge. This coverage is crucial for construction businesses.

Your construction business insurance package will be assembled by selecting the coverages that work for your unique business from a big list of available options. Coverage applies to everything from extra costs to potential legal/court fees and beyond.

What Does Construction Business Insurance Not Cover in New Jersey?

Though construction business insurance covers a lot of components for their owners, it doesn’t cover just anything. The following are examples of commonly excluded perils under construction business insurance policies in New Jersey:

  • Employee dishonesty
  • General wear and tear of equipment, etc.
  • Routine maintenance fees
  • Earthquake damage
  • Nuclear reaction and war
  • Power failure (unless it causes damage to computer systems)
  • Robbery
  • Pollution
  • Temperature/humidity changes
  • Inexplicably lost inventory
  • Flood damage*

*In a coastal state like New Jersey that’s prone to flooding, you’ll most likely want to purchase additional flood coverage for your construction business, or you may even be required to have it by your mortgage lender. Your New Jersey independent insurance agent can give you more information about finding coverage.

What Are the Benefits of Construction Business Insurance in New Jersey?

Construction business insurance provides protection to business owners in New Jersey in a number of ways. Beyond your physical assets and building, many components of your construction business stand to be destroyed or otherwise harmed by common threats. There are three major benefits to having construction business insurance:

  • Protection against legal trouble: A costly and damaging event like a fire could send a business into the red without the proper coverage. If the business was unable to pay off their loans, vendors, or employees, they could face serious legal consequences. Construction business insurance helps prevent these ugly matters from surfacing.
  • Protection against a damaged reputation: Huge incidents affecting businesses of all kinds often end up in the media. When it comes to customers getting ill or injured or having their property damaged, word about their upset could spread quickly and even turn from gossip into media coverage. Having the right construction business insurance can help prevent your business’s reputation from going up in flames.
  • Protection against bankruptcy: Imagine a severe storm or other terrible incident like an airplane crash that literally wipes out your entire office and stock of equipment and machinery. Without the right insurance, the business owner could easily be forced into bankruptcy. Construction business insurance helps businesses stay open, stay afloat, or rebuild following massive destruction.

Your New Jersey independent insurance agent can help you review your construction business insurance policy to answer any remaining questions about your coverage. They’ll also be able to help you figure out whether you’ve got enough coverage, or if you should purchase more.

How Much Does Construction Business Insurance Cost in New Jersey?

Truthfully, it depends on quite a few things. Smaller construction businesses that don’t have a ton of clients will pay a lot less than larger construction businesses that take on numerous projects.

Of course, it’s hard to offer an average figure, since each construction business is unique. But really, it all depends on a number of factors, like:

  • The type of construction business: This includes more than just if you’re responsible for constructing tool sheds or football stadiums. The kind of equipment and machinery your construction business uses and the services offered will affect the risk involved in operations. Obviously, more danger means more money for insurance.
  • The location of the construction business: Larger cities tend to have higher costs for insurance, but it goes beyond that. Depending on where you are specifically in New Jersey, your location may be more subject to various weather-related risks. Construction businesses right along the Atlantic Coast, for example, may have premiums up to 20% higher than in other areas of the state due to the increased risk of hurricane damage.
  • The number of employees: The more you've got, the more workers' comp you’ll need. Simple as that.
  • How much business you generate: Premiums are calculated based on business projections for the upcoming year. If your workload doubles, most likely your premium will too.

Your agent can work with you to find a policy that fits within your business’s budget. Have your financial restrictions in mind before you start shopping for coverage to help speed the process along.

Why Work with a New Jersey Independent Insurance Agent?

In order to get the protection you need and deserve, you’ll want to work with a trusted expert. And who could be better for the job than a local agent who shares your area code? Independent insurance agents act as your own personal insurance shoppers, offering you tons more options than one-policy companies. With just one call, they’ll hook you up with multiple quotes.

New Jersey independent insurance agents are armed with knowledge on what coverage is needed in your area, and they’ll get you set up with just enough of it — not too little, not too much. They’ll handle all the heavy lifting so you can rest assured you’ll be set up with the right coverage at the right price.

They’re not just there at the beginning either. If disaster strikes, your New Jersey agent will be there to help walk you through the claims process and make sure you’re getting the benefits you're entitled to. Now that’s thinking ahead.

Author | Chris Lacagnina

Article Reviewed by | Paul Martin

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