Excavation contractors are business owners and are usually hired as subcontractors. They grade landscapes, dig trenches, and perform other soil-related tasks. Excavation is needed for many things: building roads, running cables, laying down foundations, constructing sewers, and so on.
Since it requires the use of heavy machinery, it comes with a multitude of risks. To protect yourself when someone files a lawsuit, or cover the damages when a part of your equipment breaks down, you should get excavation contractors’ insurance.
These days, all small businesses could use some type of commercial insurance. Without insurance, you have to pay all the expenses related to property damage or bodily injuries out of your pocket. That can become way more financially straining than you would expect.
This article will cover the basics of excavation contractors' insurance: why you need it, what it covers, and how to save some money on it.
Why Do You Need Excavation Contractors’ Insurance?
Naturally, construction sites are high-risk areas. A lot of people, a lot of moving parts, and big heavy equipment can create a dangerous medley, leading to bodily injuries and other damage. With more than 40,000 excavation contractor businesses operating in the US, insurance companies have begun offering personalized insurance policies for the growing market.
Additionally, subcontractors are oftentimes required to have insurance by their employers. Not only does insurance protect you from future losses and financial ruin but it also helps you secure work in the first place. Learn more about contractor insurance Massachusetts
Which Coverages Do Excavation Contractors Need?
Since excavation contractors face a myriad of risks, it is best to have insurance that combines multiple coverages. Typically, this is what contractors’ insurance covers:
- Commercial general liability – covers your business when you are sued for causing injuries to other people or damage to their property while working. It also covers you for lawsuits when someone gets injured after you have already completed the job, e.g., someone falls into a ditch you have dug. Learn more about general liability insurance.
- Commercial property insurance – If your business owns any property, for instance, an office or a warehouse, you will need property insurance to ensure you are covered in the event of a fire, vandalism, theft, and other perils listed in your policy.
- Mobile equipment insurance – Covers your equipment such as loaders, excavators, and bulldozers in the event of theft, fire, a collision, and other events. This only applies to mobile equipment when it is not on your business premises but, for example, on a client's site.
- Workers’ compensation insurance – If an employee is injured, becomes ill, or dies on the job, you are responsible for covering their medical expenses, sick pay, and death benefit.
- Commercial auto liability coverage – Provides coverage for all kinds of vehicles used for business purposes, including excavators, dump trucks, backhoes, 18-wheelers, and transport vehicles. Vehicles can cause a lot of costly damage in the event of a collision and are also expensive themselves, so it is useful to have insurance for them.
- Inland marine coverage – When transporting machinery to the site, it will not be covered by commercial auto insurance nor any other policy. To keep your equipment protected while transporting it, you need inland marine insurance.
- Employment practices liability coverage – If a current or former employee sues your company for discrimination, harassment, wrongful termination, or some other misconduct, you will face expensive legal fees and costs. This coverage helps with paying legal expenses and settlement costs.
- Umbrella insurance – When dealing with heavy machinery and construction sites, the cost of an accident and following lawsuits can be expensive. It may even go beyond the limits of your standard coverage. If this is the case, your main insurance will not cover the difference and you will need to pay it yourself. Alternatively, you can also take out umbrella coverage to extend your existing insurance limits.
How to Save Money on Excavation Contractors’ Insurance?
Insurance is an investment in your future. It gives you financial protection to prevent bankruptcy when something goes awry. However, there are some other things you can do to avoid unnecessary expenses:
- Carry out regular equipment maintenance – Wear and tear to the equipment is usually not covered by insurance. Thus, it is in your interest to regularly service your equipment and machinery. Furthermore, tools in good working order reduce the risk of accidents and ultimately save you money.
- Offer high-quality training – Train your staff regularly and review their practices on a scheduled basis. Make sure they pass their tests. If someone’s performance does not meet the bar, ask them to go through the training again.
- Review potential employees – Before hiring a new employee, conduct a background check, particularly focusing on their driving history. An insurance company might raise your premiums if they see you have employees who have been in many accidents driving your vehicles.
- Shop around – Each insurance company assesses risk differently. When you request quotes from different providers, you can compare their offers and choose the best one for your business needs.
- Bundle policies – When you purchase multiple policies from one company, you can bundle them and get a discount.
- Ask for discounts – Whenever you purchase insurance, always ask the provider if they offer any discounts. You never know what offers might be available at that time.
There is a lot to take in about insurance. If you would like to go over your options with an insurance expert, you can send us an email, call us, or fill out the free quote form on the website.