Key Takeaways
- General liability insurance is essential to protect against injury and property damage claims on worksites
- Workers’ compensation insurance ensures injured employees are cared for and covers medical costs and lost wages
- Commercial property insurance protects company assets like equipment, vehicles, materials from damage and theft
- Commercial umbrella insurance provides additional liability protection above other policies’ limits
- Cyber liability insurance covers costs associated with data breaches and network security incidents
- Professional liability insurance protects against lawsuits regarding errors in engineering/design services
Introduction
As businesses in the highway, street, and bridge construction industry take on various risks in their daily operations, it’s important to have the right types of insurance in place. This article covers the top business insurance needs for construction companies with NAICS code 2373, including general liability, workers’ compensation, commercial property, umbrella, cyber, and professional liability insurance.
General Liability Insurance
General liability insurance is an essential coverage for highway, street, and bridge construction businesses due to the risks involved in their daily operations and projects. It protects these companies from costly liability claims and lawsuits that could arise from work site accidents, defective work, traffic control issues, pollution incidents, equipment damage, and other incidents. Having adequate GL coverage also meets contractual requirements on many projects, attracts new business, and gives customers confidence by demonstrating financial responsibility. The top estimated average annual premium for businesses in this industry is $15,000 based on revenue, employee count, project types, safety history, and other underwriting factors that influence risk levels.
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Based on average quotes from several insurance providers for businesses in the highway, street, and bridge construction industry (NAICS 2373), the estimated average annual pricing for general liability insurance is $15,000. This price was derived from taking into account factors like average revenue, number of employees, types of projects, safety record, and claims history of the business. The risk level for this type of construction work involves equipment, heavy machinery, working with heights, and roadwork that affects public safety, which results in a higher insurance rate.
Estimated Pricing: $15,000
Workers’ Compensation Insurance
Workers’ compensation insurance provides critical benefits and protection for construction companies in hazardous industries like highway, street, and bridge construction. It ensures employees are cared for if injured on the job while shielding employers from high costs and lawsuits. The average cost for this type of insurance in the highway construction industry is between $2 to $4 per $100 of payroll, which is higher than other industries due to the risks involved. The top benefits include covering medical costs and lost wages for injured employees, while the key use cases involve protecting the company from liability for on-the-job injuries.
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Based on industry research and data, the average workers’ compensation insurance pricing for businesses in the highway, street, and bridge construction industry with NAICS code 2373 is typically between $2 to $4 per $100 of payroll. This pricing is derived based on the risk level of injuries and accidents for this type of hazardous construction work. The industry has a higher than average risk level due to the use of heavy machinery, working with equipment at height, and being outdoors with variable weather conditions.
Estimated Pricing: $2 – $4 per $100 of payroll
Commercial Property Insurance
Commercial property insurance provides essential coverage to protect construction businesses from financial losses due to damaged or destroyed property and equipment. It helps ensure the company can continue operating smoothly after incidents and replace assets to complete projects on schedule. The top benefits of this type of insurance for highway, street, and bridge construction companies include protecting assets like buildings, vehicles, tools and materials; covering liability if anyone gets injured on a work site; and paying costs during business interruptions. Key usage scenarios involve coverage for accidents, natural disasters, vandalism, worker injuries, equipment issues during poor weather, and damaged or stolen transported goods. On average, commercial property premiums for these types of construction businesses are around $2.50 per $100 of insured property value.
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Based on industry averages, the estimated average annual pricing for commercial property insurance for businesses in the highway, street, and bridge construction industry with NAICS Code 2373 would be around $2.50 per $100 of insured property value. This pricing is derived from considering the types of properties and equipment used in this industry such as construction machinery, vehicles, tools, materials in storage, and office equipment which present average risks. The pricing also factors in the industry hazard level and claims experience.
Estimated Pricing: $2.50/$100
Commercial Umbrella Insurance
Commercial umbrella insurance provides an additional layer of liability protection above a business’s commercial general liability and auto policies. It helps fill coverage gaps and provides higher liability limits to protect both a company and its owners from the financial risks of lawsuits in high-risk industries like highway, street, and bridge construction. Umbrella insurance is especially important for highway, street, and bridge construction businesses due to their exposure to potentially high-cost liability claims from accidents and injuries related to large assets, heavy equipment, and construction projects.
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Based on research, commercial umbrella insurance for businesses in the highway, street, and bridge construction industry with NAICS code 2373 typically costs between $1.50 to $2.50 per $100 of coverage, with a minimum premium of $1,500. The pricing would be derived based on the business’s annual revenue, number of employees, types of projects/contracts, loss history, safety practices/protocols in place, and claims/liability history.
Estimated Pricing: $1,500 – $2,500
Cyber Liability Insurance
Construction firms store sensitive project and client information that could result in liabilities and costs if breached. Cyber insurance can help protect these businesses from unexpected expenses related to cyber incidents and data theft. Cyber insurance can also help cover costs from ransomware attacks, network outages, and cyber extortion attempts which are common risks for this industry.
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Based on typical pricing models and risk factors for this industry, the estimated average annual premium for cyber liability insurance would be around $3,500. This takes into account the industry’s moderate risk level and average sized revenue of around $5 million. The premium was calculated using 0.07% of annual revenue which is a commonly used method in this space. This industry deals with sensitive project data but generally has lower risks than sectors like healthcare or financial services.
Estimated Pricing: $3,500
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, protects construction companies from financial losses due to mistakes or faulty work in their professional services. It covers lawsuits, legal fees, and costs associated with correcting deficiencies. Some key benefits of professional liability insurance for highway, street, and bridge construction businesses include covering lawsuits from errors and omissions in engineering/design services, protecting from claims of negligence, and providing defense for civil lawsuits alleging inadequate supervision or project oversight. It also reimburses for damages paid due to professional mistakes like structural failures and covers costs associated with correcting or re-doing defective plans, designs, or project work. Professional liability insurance helps protect these businesses from the financial risks involved in their complex construction projects.
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Based on research and industry standards, the average annual pricing for professional liability insurance for businesses in the highway, street, and bridge construction industry (NAICS 2373) is around $10,000 – $15,000 per year. This is calculated based on factors like revenue, number of employees, loss history, and level of risk associated with the operations. The higher risk involved in construction projects typically results in higher insurance rates for this industry.
Estimated Pricing: $12,500
Conclusion
Understanding insurance requirements specific to the highway, street, and bridge construction industry can help businesses avoid financial risks down the road. This article outlined the key benefits and use cases of several essential business insurance policies for construction companies to consider as part of a comprehensive risk management strategy.