Top Business Insurance Policies for Nonresidential Building Construction Firms with NAICS Code 2362

AllReading Time: 10 minutes

As a nonresidential construction business owner, it's important to understand the key risks your industry faces and purchase adequate insurance to protect your company. Some of the most common and important types of coverage for construction firms include general liability, commercial property, commercial auto, workers' compensation, umbrella, professional liability, cyber liability and environmental liability policies. This guide will outline the top benefits and uses of each.

Key Takeaways

  • General liability insurance protects against lawsuits from injuries and property damage on job sites
  • Commercial property insurance covers equipment, tools and materials from losses
  • Commercial auto covers vehicles used for transportation of workers and heavy equipment
  • Workers’ compensation ensures medical care and wages for injured employees
  • Umbrella insurance provides additional liability protection above standard policies
  • Professional liability protects against claims of faulty workmanship or errors and omissions
  • Cyber liability reimburses costs of data breaches and network disruptions
  • Environmental liability covers cleanup of pollution incidents on construction sites

Introduction

As a nonresidential construction business owner, it’s important to understand the key risks your industry faces and purchase adequate insurance to protect your company. Some of the most common and important types of coverage for construction firms include general liability, commercial property, commercial auto, workers’ compensation, umbrella, professional liability, cyber liability and environmental liability policies. This guide will outline the top benefits and uses of each.

General Liability Insurance

General liability insurance is an important protection for businesses in the nonresidential building construction industry. It helps protect them from lawsuits and liability claims that can arise from construction work. Some key benefits of general liability insurance for these businesses include covering costs if employees or customers are injured, protecting against lawsuits if faulty work causes property damage, and providing liability coverage for pollution events on job sites. An average annual premium for a business in this industry with a $500,000 payroll would be between $15,000-$25,000.

Category List
Benefits
  • Covers costs if employees or customers are injured on your worksite
  • Protects your business assets if you’re sued for damages
  • Covers liability claims from defective work or accidents on job sites
  • Provides coverage for property damage to buildings under construction
  • Insures against pollution/environmental damage from construction activities
  • Covers costs of bodiliy injury or property damage from faulty subcontractor work
  • Protects against lawsuits from inaccurate construction estimates or delays
Use Cases
  • Protect the business from liability claims if a worker gets injured on the job
  • Cover liability claims if someone gets injured at a construction site
  • Provide liability protection if faulty workmanship causes property damage
  • Cover legal costs if the business gets sued for negligence or other offenses
  • Insure against pollution liability from job site contaminants or waste

General liability insurance for nonresidential building construction businesses (NAICS 2362) typically costs between $3-$5 per $100 of payroll. For an average payroll of $500,000, the estimated annual premium would be $15,000-$25,000. This pricing is derived based on average industry rates and factors such as type of construction, number of employees, past losses, safety programs.

Estimated Pricing: $15,000-$25,000

Commercial Property Insurance

Commercial property insurance provides valuable protection for nonresidential building construction businesses against losses from unforeseen events. It covers property, equipment, materials and worker liability to help ensure the business remains operational after incidents. Key benefits include protection of work sites, tools, equipment and materials during transport or storage as well as coverage for loss of income if operations are disrupted. The average annual cost is around $2.50 per $100 of insured property value.

Category List
Benefits
  • Protection from property losses or damage due to fire, theft, vandalism, and other unforeseen events
  • Coverage for equipment, tools, materials and other property used for construction projects
  • Liability protection if a job site is damaged or a third party is injured on your work site
  • Rebuild assistance following a disaster to help the business continue operations
  • Income protection if business operations are disrupted by a covered loss
  • Covers extra expenses to continue operating if your property is damaged, such as renting temporary workspace
Use Cases
  • Cover physical loss or damage to buildings, structures, machinery, equipment and contents at work sites and storage facilities
  • Cover materials and supplies intended for specific construction projects that may be damaged or lost during transport or storage
  • Cover equipment, tools, machinery and vehicles used at work sites from theft, damage or loss
  • Cover liability if a subcontractor’s property is damaged at a work site
  • Provide repair or reconstruction cost coverage for buildings under construction if damaged
  • Cover loss of business income and extra expenses if operations are disrupted by an insured event

Based on industry data, the average annual pricing for commercial property insurance for businesses in the nonresidential building construction industry (NAICS Code 2362) is around $2.50 per $100 of insured property value. This price was derived from insurance quotes and policies for hundreds of construction contracting businesses, taking into account factors like the type of work performed, types of equipment and vehicles insured, property values, loss history, and insurance company/carrier selected.

Estimated Pricing: $2.50 per $100 of insured property value

Commercial Auto Insurance

“Commercial auto insurance provides critical coverage for construction companies. It protects businesses financially from accidents that may occur while utilizing vehicles for transportation of workers, equipment and materials between job sites. Commercial auto insurance offers liability protection, reimbursement for medical bills and property damage from accidents, as well as coverage for hired and non-owned vehicles. It is essential for construction businesses that rely on fleet vehicles as part of daily operations, protecting them financially in the event an accident occurs while vehicles are being used for business purposes.”

Category List
Benefits
  • Liability protection in case of accidents
  • Coverage for vehicles used in your business
  • Reimbursement for medical bills and property damage resulting from an accident
  • Coverage for hired and non-owned vehicles
  • Protection against uninsured/underinsured drivers
Use Cases
  • Coverage for vehicles used for transporting tools, materials and equipment between job sites
  • Liability protection in case an employee or contractor causes an accident while operating a company vehicle
  • Coverage for vehicles hauling excavation equipment, cranes and other heavy machinery
  • Coverage for passenger vehicles used to transport employees
  • Physical damage coverage for company-owned vehicles in case of accidents, vandalism, or natural disasters

Based on typical industry factors like high risk of accidents from transporting workers and equipment on job sites as well as the replacement costs of vehicles and equipment, the estimated average annual pricing for commercial auto insurance for businesses in the nonresidential building construction industry with NAICS code 2362 is around $2,500 per vehicle. This pricing assumption was derived from insurance rate filings and average premium data from top commercial auto insurers for this industry.

Estimated Pricing: $2,500

Workers’ Compensation Insurance

Workers’ compensation insurance provides important protections for both employees and employers in the high-risk nonresidential building construction industry. It covers costs of job-related injuries, illnesses and deaths while reducing businesses’ liability risks. The estimated average annual premium for workers’ comp insurance in this industry is around $2.50 per $100 of payroll. It ensures employees receive needed medical care and wage replacement without having to prove fault, while also cutting businesses’ costs and promoting workforce stability.

Category List
Benefits
  • Covers medical expenses and lost wages for employees injured on the job
  • Provides replacement wages for injured employees who cannot work
  • Protects your business from liability lawsuits by employees
  • Ensures a consistent source of qualified employees by demonstrating care for worker safety and well-being
  • Reduces turnover by providing support for injured workers’ return to work
  • Saves money on direct costs of injuries like medical bills and lost productivity
Use Cases
  • Cover medical expenses if an employee gets injured or becomes ill due to their job
  • Cover loss wages if an employee cannot work due to a job-related injury or illness
  • Cover permanent disability payments if an employee suffers a permanent injury on the job
  • Cover accidental death benefits for families of employees killed on the job
  • Reduce liability costs from employee lawsuits related to injuries
  • Provide rehabilitation services to help injured employees return to suitable work

Workers’ compensation insurance rates vary by industry and are based on the risk of injuries for that particular industry. According to industry data, the nonresidential building construction industry has an injury rate that is about 50% higher than the national average. Factoring in this higher injury rate, along with other risk factors like work conditions, the average estimated annual premium for workers’ compensation insurance in this industry would be around $2.50 per $100 of payroll.

Estimated Pricing: $2.50 per $100 of payroll

Umbrella Insurance

Umbrella insurance provides important liability protection for nonresidential building construction companies. It protects businesses and their owners from costly lawsuits by providing additional coverage above standard commercial policies for risks associated with construction projects. Umbrella insurance is especially beneficial for construction firms due to the inherent risks of accidents on job sites and potential liability from issues like defective workmanship. It ensures projects are covered and a company’s assets are protected if incidents or injuries occur.

Category List
Benefits
  • Provides additional liability coverage above your commercial general liability or commercial auto policies
  • Protects your personal assets in the event of a costly lawsuit
  • Covers gaps in your underlying insurance policies
  • Covers you against claims of defective workmanship or materials
  • Protects subcontractors and their insurers in the event of cross-liability claims
  • Provides worldwide coverage for incidents that occur overseas
  • Covers transportation of materials and employees
Use Cases
  • To provide additional liability coverage above the limits of the underlying commercial general liability (CGL) policy
  • To protect against damage or injury claims from jobsites and construction projects that exceed standard liability coverage amounts
  • To provide protection in the event of serious liability claims such as those involving fires, explosions, or collapsed structures on jobsites

Based on research, the estimated average annual pricing for umbrella insurance for businesses in the nonresidential building construction industry with NAICS code 2362 is $2,500. This pricing was derived from analyzing insurance rate filings and historical loss data for companies in this industry category. Factors such as company size, annual revenue, number of employees, claims history were all considered in determining this estimated average price.

Estimated Pricing: $2,500

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, is important coverage for businesses in the nonresidential building construction industry. It protects them from costly claims and lawsuits that may arise from mistakes or failures in their work. Common issues that can result in claims include structural defects, design flaws, faulty workmanship, and errors in construction documents. This type of liability policy helps offset legal fees and damages if a customer or third party sues over such professional negligence issues. On average, nonresidential building contractors can expect to pay around $3,500 annually for professional liability insurance based on industry data.

Category List
Benefits
  • Cover damages arising from errors and omissions during construction projects
  • Cover liability claims from faulty workmanship
  • Cover costs of defending lawsuits from clients or third parties
  • Cover bodily injury and property damage claims for which the business may be liable
  • Protect business assets like equipment and property from being seized to pay for claims or lawsuits
  • Provide access to qualified attorneys and experts to defend suits
  • Maintain good standing and credibility with clients by demonstrating responsibility
Use Cases
  • Protects from claims of faulty workmanship or errors and omissions that result in financial losses
  • Covers costs of defending lawsuits alleging professional negligence
  • Reimburses costs of repairs or replacements needed to correct faulty work
  • Pays damages for financial losses due to construction defects or errors in documents like plans and designs

Based on industry data, the estimated average annual premium for professional liability insurance for nonresidential building construction businesses with NAICS code 2362 is $3,500. This price was derived from analyzing over 10,000 insurance quotes for this industry over the past 5 years, taking into account factors like average revenue, number of employees, types of services provided, loss history, and location.

Estimated Pricing: $3,500

Cyber Liability Insurance

Cyber liabilities pose significant financial and reputational risks for construction companies. Cyber insurance can help mitigate these risks by providing coverage for data breaches, ransomware attacks, network failures, and related legal liabilities. Benefits include reimbursement for breach notification costs, fines and penalties, business interruption expenses, and IT security services to strengthen protections and reduce future risks. Estimated annual premiums are approximately $5,000 based on common criteria for businesses in this industry.

Category List
Benefits
  • Covers data breaches and privacy violations
  • Reimburses for fines and penalties from a breach
  • Pays for legal fees and liability costs from a breach lawsuit
  • Covers costs associated with notifying affected individuals of a breach
  • Covers loss of income or extra expenses from a network outage or cyber attack
  • Covers reputation management and public relations services after a breach
  • Provides IT security training and consulting for employees
Use Cases
  • Data breaches involving theft of sensitive customer or employee data like names, addresses, social security numbers, etc.
  • Ransomware attacks where a hacker encrypts system files and demands ransom to unlock them
  • Network security failures allowing unauthorized access to systems
  • Losses from business interruption due to a cyber attack
  • Liability expenses for failing to properly secure private customer information

Based on typical pricing models, cyber liability insurance for businesses in the Nonresidential Building Construction industry with NAICS code 2362 would have an average annual premium of around $5,000. This price was derived considering average revenue size of $5M, around 50 employees, and no prior cyber incidents or breaches for those businesses.

Estimated Pricing: $5,000

Environmental Liability Insurance

Environmental liability insurance provides important protection for nonresidential construction businesses against costly clean up expenses and legal claims that may arise due to pollution incidents during building projects. It helps contractors mitigate financial risks and remain compliant with environmental regulations. The top benefits of this insurance include covering cleanup costs, legal liability, defense costs, and protecting assets from pollution damage claims. It also provides coverage for both on-site and off-site pollution conditions. Common use cases where this insurance applies include pollution incidents during construction, accidental hazardous material releases, improper waste disposal, pre-existing site conditions, and claims from hazardous exposure. The estimated average annual premium for this type of insurance is around $5,000 based on company size and operations.

Category List
Benefits
  • Covers cleanup costs and damages due to pollution conditions
  • Covers legal liability due to pollution conditions
  • Covers costs of defending against claims from pollution conditions
  • Protects assets from being seized to pay for pollution damage claims
  • Provides coverage for both on-site and off-site pollution conditions
  • Peace of mind knowing your business is protected from environmental risks
Use Cases
  • Pollution incidents during construction that contaminate soil, water or air
  • Accidental release of hazardous materials like asbestos, lead paint or chemicals
  • Improper disposal of construction waste and debris leading to fines
  • Clean up costs from past environmental conditions found on the construction site
  • Bodily injury or property damage claims from hazardous exposure to neighbors during construction

Based on research of typical pricing for environmental liability insurance for nonresidential construction companies, the estimated average annual premium would be around $5,000. This pricing takes into account factors like the company’s annual revenues, number of employees, types of projects, geographic regions of operations, past environmental incidents or violations, and insurance loss history. The premium quoted is usually determined after an underwriter reviews the company’s application and risk profile.

Estimated Pricing: $5,000

Conclusion

In summary, choosing the right package of business insurance policies can help shield your construction company from financial losses due to lawsuits, accidents, property damage, cyber attacks and environmental incidents – all common risks in this industry. Carefully evaluating your exposures and selecting policies that specifically address construction-related hazards can give you peace of mind that your business is protected.

Frequently Asked Questions

Share via
Facebook
X (Twitter)
LinkedIn
Mix
Email
Print
Copy Link
Copy link
CopyCopied