Top Business Insurance Options for Commercial and Institutional Building Construction Companies (NAICS 236220)

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This guide examines the key business insurance types commercial and institutional building construction companies should consider like general liability, workers' compensation, commercial property, auto and more.

Key Takeaways

  • General liability insurance protects against costly third-party claims and lawsuits.
  • Workers’ compensation coverage is legally required and provides benefits for injured employees.
  • Commercial property insurance protects valuable business assets and materials.
  • Commercial auto insurance covers vehicles essential for transportation needs.
  • Professional liability protects against negligent acts, errors and omissions claims.
  • Pollution liability covers environmental incidents common in construction projects.

Introduction

The commercial and institutional building construction industry faces a variety of risks that threaten business continuity and profits. Proper insurance plans are crucial to manage exposure and costs. This guide examines the top business insurance options construction companies should carry based on industry data and averages.

General Liability Insurance

General liability insurance provides protection for commercial and institutional building contractors against costly claims and lawsuits that could threaten their businesses. It covers a variety of risks inherent in construction projects like injuries, defective work, damage to other property, and incidents involving subcontractors or the environment. Some key points about general liability insurance for this industry include: it protects against third-party claims like injuries on the jobsite or damage to other property from work, provides coverage for legal defense costs if sued over issues from work or operations, insures the costs of recalls if faulty materials or products are used in construction, and estimated annual pricing is around $5,000-6,000 on average for businesses in this industry.

Category List
Benefits
  • Protection from third-party claims and lawsuits if a worker is injured on the jobsite or if your work damages someone else’s property
  • Covers costs associated with accidents and injuries both on and off the jobsite
  • Pays for legal defense costs if you’re sued for issues arising from your work or operations
  • Provides coverage if your completed work is found to have defects that cause property damage or bodily injury
  • Covers liability arising from use of subcontractors
  • Insures against recalls of faulty materials and products used in construction
  • Covers pollution liability for contaminants released during construction work
  • Protects business owners from financial ruin if a major liability incident occurs
Use Cases
  • Protect against bodily injury and property damage claims from worksite accidents
  • Cover claims from faulty workmanship or defective materials/products
  • Provide defense against lawsuits from work-related incidents
  • Cover claims from damage to third-party property during operations
  • Protect subcontractors and their employees working on projects
  • Cover claims from pollution and environmental incidents at worksites

Based on industry research and analysis, the estimated average annual pricing for general liability insurance for businesses in the commercial and institutional building construction industry with NAICS code 236220 is around $4,000 – $6,000 per year. This pricing is derived from considering factors like company size, annual revenue, number of employees, loss history, risk management practices, and coverages included. The average quoted price per project for general liability insurance in this industry tends to be around 0.5% – 1% of the total project cost.

Estimated Pricing: $5,000 – $6,000 per year

Workers Compensation Insurance

Workers compensation insurance provides critical protection for businesses in the commercial and institutional building construction industry. As the references shown, this industry faces risks of various injuries for employees due to the physical labor involved. Having workers compensation can help cover costs of accidents, lost wages, medical bills and more, which is beneficial for both employers and employees. It is also required by law in all states as one of the references stated. The estimated pricing is between $2.50 to $3.00 per $100 of payroll based on the industry data provided.

Category List
Benefits
  • Covers medical expenses if an employee gets injured on the job
  • Pays lost wages if an employee cannot work due to a job-related injury or illness
  • Protects the business from lawsuits if an employee is injured and decides to litigate
  • Required by law in all states
  • Provides return to work programs to help injured employees recover and return to their duties
  • Attracts quality employees by demonstrating your commitment to their safety and well-being
Use Cases
  • Coverage for injuries and illnesses employees sustain on the job
  • Pays medical expenses and lost wages for employees who get hurt at work
  • Protects employers from liability claims if an employee is injured and decides to sue
  • Covers costs of rehabilitation and retraining if an injury prevents employees from doing their regular job
  • Provides benefits for workers injured or killed on the job, regardless of fault

Based on national average workers compensation insurance rates for the commercial and institutional building construction industry (NAICS Code 236220), the estimated average pricing would be between $2.50 and $3.00 per $100 of payroll. This is derived from industry loss data and risk factors such as the types of jobs/tasks involved in commercial and institutional construction which can include worksites with falls, heavy equipment, and materials. The national average price is then adjusted based on a company’s individual risk factors, loss history, safety programs, etc. to derive their final pricing.

Estimated Pricing: $2.50-$3.00/100 of payroll

Commercial Property Insurance

Commercial property insurance provides essential protection for commercial construction companies against risks of property damage or loss during active building projects. It covers construction materials, equipment, tools and temporary structures against accidents. The insurance also protects valuable office contents and offers business interruption coverage if projects are delayed due to covered losses. Pricing is typically around $2.50 per $100 of insured property value based on average claims in this industry.

Category List
Benefits
  • Protection against property damage and losses from fire, lightning, explosions, windstorms/ hurricanes
  • Protection for office equipment, tools, machinery and other contents
  • Liability coverage in case someone is injured on your property or if your operations damage someone else’s property
  • Replacement cost coverage to fully repair or rebuild your property after a loss
  • Business interruption insurance to continue covering overhead expenses if your operations are shut down due to a covered property loss
  • Flood insurance to protect against water damage not covered by standard policies
  • Equipment breakdown coverage for failures or breakdown of critical machines and equipment
  • Valuable papers and records coverage to protect and replace important documents
Use Cases
  • Protect buildings and structures from risks like fire, lightning, explosion, windstorm or hail, riots, aircraft or vehicle damage during construction
  • Cover building materials and supplies stored on construction sites or in warehouses
  • Cover equipment, tools and machinery used at construction sites or stored in equipment yards against theft or damage
  • Provide business interruption coverage to continue paying employees and cover ongoing expenses if a construction project is delayed due to a covered loss
  • Protect valuable office contents and computer/communication equipment from losses
  • Cover temporary structures built on job sites like scaffolding or construction trailers used as jobsite offices

Based on industry analysis, the estimated average annual pricing for commercial property insurance for businesses in the Commercial and Institutional Building Construction industry (NAICS Code 236220) is around $2.50 per $100 of insured value. This pricing is derived from average claims data for property damage and losses in this industry over the past 10 years, adjusted for factors like business size, employee count, building construction type, and risk mitigation measures used.

Estimated Pricing: $2.50/$100

Commercial Auto Insurance

Commercial vehicles are essential assets for construction businesses. This reference provides an overview of the top benefits, use cases and estimated pricing of commercial auto insurance for companies in the commercial and institutional building construction industry.

Category List
Benefits
  • Liability protection against injury to others
  • Coverage for damage to vehicles and property
  • Medical payments coverage for injuries
  • Uninsured/underinsured motorist coverage
  • Replacement cost coverage to repair or replace vehicles after an accident
  • Rental reimbursement if a vehicle needs to be replaced after an accident
  • Loss of income protection if vehicles are disabled from an accident
Use Cases
  • Coverage for vehicles owned by the business like trucks and equipment transport vehicles
  • Liability coverage for incidents caused by company vehicles
  • Medical payments coverage for injuries to others from vehicle accidents
  • Coverage for hired and non-owned vehicles used in business operations
  • Collision coverage to repair or replace insured vehicles involved in accidents

Based on industry data and average risks, the estimated average annual price for commercial auto insurance for businesses in the commercial and institutional building construction industry with NAICS code 236220 is around $2,500 per vehicle. This price is derived from considering average vehicles, drivers, claims history and other risk factors for this industry type. Factors like number of vehicles, driver records, safety practices can impact the final quoted price.

Estimated Pricing: $2,500

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, provides important protection for commercial and institutional building construction businesses. It helps shield them from costly litigation risks that may arise due to negligent acts, errors or omissions in the performance of their construction and design services. Professional liability insurance offers coverage for legal defense costs and settlement fees if the business is sued due to professional negligence. It also helps cover costs to correct defective or faulty work. This type of insurance gives peace of mind knowing the business is financially protected from large lawsuits and claims.

Category List
Benefits
  • Protects the business from negligent acts, errors, or omissions in the performance of professional services
  • Covers legal costs and settlement fees if sued due to professional negligence
  • Helps maintain positive business relationships by demonstrating financial responsibility to clients
  • Covers costs associated with correcting defective or faulty work
  • Provides peace of mind knowing the business is protected from costly litigation
  • Covers claims brought by subcontractors for issues relating to their work
  • Protects current and former partners and employees from claims made after they leave the firm
  • Insulates the business from financial hardship or even bankruptcy in the event of a large settlement or judgment
Use Cases
  • Protection against lawsuits from injured parties if a building collapses or is damaged due to inadequate construction or design
  • Protection against lawsuits from owners, contractors, or employers if a construction project is delayed or costs more than expected due to negligent acts, errors, or omissions
  • Protection against lawsuits from owners, contractors, or other parties if a building violates building codes or regulations due to negligent oversight or misrepresentation

Based on typical pricing factors like annual revenues, number of employees, claims history and risk profile, the estimated average annual premium for professional liability insurance for businesses in this industry is around $5,000-$10,000. Premiums are often calculated as a percentage of annual revenue, usually around 1-2%. So for a business in this industry with $5 million in annual revenue, their estimated annual premium would be $50,000-$100,000.

Estimated Pricing: $5,000-$10,000

Pollution Liability Insurance

Pollution liability insurance helps commercial and institutional building construction companies manage pollution risks and costs on worksites and job sites. It provides financial protection if accidental pollution requires cleanup or causes injuries/damage. With this coverage, companies can comply with regulations and mitigate risks from unexpected pollution events or claims. This type of insurance is important for the industry to protect against pollution from common sources like construction debris disposal, hazardous waste handling and transportation, accidental spills, stormwater runoff, and third-party injury/damage claims resulting from pollution incidents during projects.

Category List
Benefits
  • Covers costs of cleaning up pollution incidents
  • Covers legal costs if sued for pollution incidents
  • Covers bodily injury or property damage from pollution
  • Protects business assets from pollution lawsuits
  • Covers costs of assessing and monitoring pollution conditions
  • Provides access to pre-approved cleanup contractors and experts
  • Complies with state/federal environmental regulations
  • Mitigates financial risks from unforeseen pollution events
  • Prevents business/project interruptions from pollution claims
Use Cases
  • Pollution from construction debris, asbestos or lead removal
  • Pollution during transportation and disposal of hazardous waste
  • Accidental spill or discharge of pollutants during construction
  • Pollution from stormwater runoff from construction sites
  • Third-party bodily injury or property damage claims from pollution incidents

Based on industry data and analysis, the average annual pricing for pollution liability insurance for businesses in the commercial and institutional building construction industry (NAICS Code 236220) is around $2,500. This pricing was derived based on average revenue and pollution risk levels for businesses in this industry. It also assumes no prior pollution claims.

Estimated Pricing: $2,500

Conclusion

In summary, general liability, workers’ compensation, commercial property, auto and professional liability insurances provide baseline coverage for construction businesses. Pollution liability also mitigates environmental risks inherent to the industry. Maintaining adequate insurance limits and reviewing coverages regularly helps companies stay protected and compliant.

Frequently Asked Questions

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