What you need to know about insurance before your next commercial construction project
When you’re ready to build your next commercial construction project and you want to do it right, insurance is anything but optional. First, it’s essential for protecting your business interests and the project itself, but beyond that you also want to make sure the contractors, architects and other experts helping you reach your goal are looking out for their people and the project as well. The insurance requirements differ depending on the scope of your project and its location, so you’ll want to consult with experts on your insurance questions. To help you out, here are some essential things you need to know about insurance before your next commercial construction project…a few of which may surprise you.
Your contractor should have a wide breadth of coverage, but you can request more
According to www.thebalancesmb.com, “The Common Insurances Construction Contractors Must Have,” oftentimes, it is a requirement of the project for a contractor to have a specific kind of insurance coverage to qualify for the project. Chances are your project has some unique aspects to it, so it’s important early on to consider whether you may want to specify any project-specific insurance requirements that the contractor and subcontractors will have to meet.
Quick project timeline? Insurance may cost you more
According to www.constructiondive.com, “7 ways to prevent construction insurance losses,” creating a realistic timeline can save you money on insurance related to your project. Why? Because insurance claims on construction projects rise when the project falls behind schedule or when the project had an unreasonable timeline from the start. Simply put, the insurance underwriter sees greater risk with a rush project. In some cases, developers or owners will take the loss, but when budgets are tight, knowing this can help you potentially save some money on insurance.
Subcontractors may have cheap insurance
In an effort to keep overhead low, subcontractors may purchase the cheapest insurance available to them. To protect yourself and the project, you may want to specify acceptable insurance exclusions and limits for contractors. An insurance broker with experience in construction can review subcontractor certificates of insurance to ensure specified insurance coverages and limits are being met. Of course, selecting a design-build firm for your project could eliminate this issue altogether; with a design-build team in place, you can rely on your design-builder to ensure all project team members have acceptable insurance coverages and limits in place.
Purchasing cheaper materials may cost you in insurance
When holding the line on a commercial construction budget, it may be tempting to select cheaper materials. But while inferior materials may save you money short-term, in the long-run, they may cost you more in insurance because they are more likely to malfunction, wear out or break. You’ll want to consult with an insurance expert to determine what choices are right for you and your project. Again, rely on a design-build team to provide guidance during the design phase regarding materials and/or building assemblies that may impact insurance underwriting.
Commercial construction: no one-size-fits-all
When it comes to commercial construction, as you know, every project is different. For that reason, insurance for commercial construction projects is complicated, and the guidance of an insurance expert early on in the planning process can be invaluable. By thinking about the factors that affect insurance rates, and contemplating how insurance can work for your unique project, you’re sure to make solid decisions based on the knowledge you’ve gained.