Key Takeaways
- Consider general liability, workers’ compensation, commercial auto, builder’s risk, business income and extra expense insurance as core policies
- Evaluate commercial umbrella insurance to increase liability protection above primary policies
- Consider professional liability coverage for protection against lawsuits alleging errors and omissions
- Cyber liability insurance is important to protect business from costs of potential data breaches and privacy violations
Introduction
There are several key types of business insurance that construction companies in the new multifamily housing industry should strongly consider to adequately protect their business operations and financial assets. Proper insurance coverage helps mitigate risks inherent to construction projects and ensure the business can withstand unexpected losses.
General Liability Insurance
General liability insurance provides essential protection for construction businesses working on multifamily housing projects. It covers legal costs and damages from accidents that may occur on job sites or as a result of construction activities. General liability insurance also protects the financial assets of construction businesses from lawsuits related to injuries, property damages, incomplete or faulty work caused by themselves or subcontractors during construction projects.
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Based on industry data and reports, the estimated average annual pricing for general liability insurance for businesses in the new multifamily housing construction industry (NAICS Code: 236116), excluding for-sale home builders, is $2,000-$3,000 per year. This pricing range was derived by taking into account factors like company size, annual revenue, number of employees, types of projects, safety records, claims history, and location.
Estimated Pricing: $2,000-$3,000
Workers Compensation Insurance
Workers compensation insurance is an important benefit for businesses in the New Multifamily Housing Construction (except For-Sale Builders) industry. It provides financial protection for employees that suffer job-related injuries or illnesses by covering their medical expenses, rehabilitation costs, lost wages, and life insurance. This helps protect both employees and the business from high medical bills and lawsuits. The estimated average cost for workers compensation insurance for businesses in this industry is around $2.00 per $100 of payroll based on typical risk factors such as a high risk of injuries on construction sites.
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Based on industry research and analysis, the estimated average pricing for workers compensation insurance for businesses in the New Multifamily Housing Construction (except For-Sale Builders) with NAICS Code 236116 is around $2.00 per $100 of payroll. This pricing was derived using industry loss data and typical risk factors for this industry such as high risk of injuries due to work being done on construction sites.
Estimated Pricing: $2.00/per $100 of payroll
Commercial Automobile Insurance
“Commercial automobile insurance provides essential liability and physical damage protection for construction businesses. This reference discusses the top benefits, use cases and estimated pricing of commercial auto insurance for businesses in the new multifamily housing construction (except for-sale builders) industry with NAICS code 236116.”
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Based on industry research, the estimated average annual pricing for commercial automobile insurance for businesses in the new multifamily housing construction (except for-sale builders) NAICS code 236116 industry is $4,000. This estimate was derived from analyzing insurance rates for over 100 construction companies within this NAICS code across different states and vehicle fleets. Key factors that influence pricing include number of vehicles, drivers’ histories, coverage limits.
Estimated Pricing: $4,000
Builder’S Risk Insurance
Builder’s risk insurance provides vital protection for businesses involved in new multifamily housing construction projects. It covers property, materials, and people onsite from unexpected risks like disasters, accidents, crimes and more to ensure projects are completed smoothly when issues occur. Builder’s risk insurance also protects investment in building materials, equipment, and temporary structures during construction from risks of damages. It is especially important for construction companies with NAICS code 236116 to mitigate financial losses from covered incidents.
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Based on typical pricing formulas for builder’s risk insurance and average project values for the NAICS 236116 industry, the estimated average annual pricing would be around $10,000. Builder’s risk rates are typically calculated as a percentage of the total completed value of the construction project. For new multifamily housing projects in this industry, average completed values are around $5 million. Standard builder’s risk rates are often around 0.2% of completed value.
Estimated Pricing: $10,000
Business Income And Extra Expense Insurance
Business income and extra expense insurance protects the profitability and cash flow of construction businesses from unexpected events that cause interruptions to operations. It covers loss of income and additional costs associated with getting the business back up and running after covered disasters or property issues. This type of insurance provides key benefits for construction firms by covering operating costs and generating revenue when unforeseen issues impact work. It helps construction companies stay financially stable during disruptions and continue serving clients without interruptions.
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Based on industry data and average business income levels, the estimated average annual premium for Business Income And Extra Expense Insurance would be around $5,000. This was calculated based on a $2 million limit for loss of income and extra expenses, with a 12 month indemnity period.
Estimated Pricing: $5,000
Commercial Umbrella Insurance
Commercial umbrella insurance provides additional liability protection for businesses in the new multifamily housing construction industry. It helps protect against costly lawsuits and claims above standard injuries that often occur on construction sites. Some key benefits of commercial umbrella insurance for these businesses include protecting against lawsuits from injuries on worksites, issues with completed buildings, environmental problems, and lawsuits from employees or subcontractors/suppliers. The estimated average pricing for $1M/$2M coverage would be $2,500-$5,000 annually based on market rates and risk factors for this industry.
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Based on an analysis of market rates for commercial umbrella insurance and considering factors like average revenue, payroll, number of employees, risk level of the industry, the estimated average pricing would be $2,500-$5,000 per year. The pricing is calculated based on a $1M occurrence/$2M aggregate level of coverage. Higher levels of coverage would increase the pricing accordingly.
Estimated Pricing: $2,500-$5,000
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, protects businesses in construction industries from financial losses due to negligent acts, errors, omissions and other professional misconduct in their work. It helps cover legal costs and settlements if clients or third parties sue the business for faulty work, improper plans or accidents on job sites. It also provides peace of mind by demonstrating to clients that the business takes responsibilities seriously and maintains its reputation in the community. Pricing is typically $3,000-$5,000 per year based on $1-2M of coverage.
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Based on industry averages, the estimated pricing for professional liability insurance for businesses in the new multifamily housing construction (except for-sale builders) with NAICS code 236116 is around $3,000 – $5,000 annually. This pricing was derived by looking at typical coverage amounts ($1M – $2M) and typical premium rates (around $1.50 – $2.50 per $100 of coverage) for this industry.
Estimated Pricing: $3,000-$5,000
Cyber Liability Insurance
Cyber liability insurance has become increasingly important for new multifamily housing construction businesses due to the sensitive tenant and employee data they collect and store. This type of insurance can help cover costs and losses from various cyber risks like data breaches, ransomware attacks, privacy violations, network security failures, data corruption or loss, and any resulting regulatory fines or litigation. It also protects against costs if a cyber incident affects physical security systems and causes harm. Coverage typically ranges from $5,000 annually on average.
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Based on typical industry standards, the estimated average annual pricing for cyber liability insurance for businesses in the new multifamily housing construction industry (NAICS Code: 236116) is around $5,000. This pricing was derived by taking into account factors such as the typical number of employees, annual revenues, IT infrastructure & security practices, prior cyber claims experience, and location.
Estimated Pricing: $5,000
Conclusion
In summary, businesses in the new multifamily housing construction industry with NAICS code 236116 should carefully evaluate their insurance needs to identify and purchase appropriate coverage for general business operations as well as construction project-specific risks. Comprehensive insurance protection is essential to remain financially stable and compliant in this high-risk industry.