Though the construction industry has many specialized niches, there are a few insurance basics every construction business needs to know. Whether you are in residential or commercial building, a subcontracting business or a specialty like boring or pool installation, you need protection for your business assets. There are three overarching areas where construction businesses need insurance protection: property, liability for an injury to those outside your company where you may be deemed responsible, and claims of injury or ill treatment from those within your organization.
Commercial Property Insurance for Construction Companies
Your equipment and buildings probably represent the largest capital outlay and are typically the most vulnerable to forces beyond your control. Perils include:
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Natural disasters,
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Theft,
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Vandalism,
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Equipment failure,
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Supply chain or utility interruptions,
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Fire,
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Cyber (data breaches, ransomware),
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Water leaks and intrusion, and
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Accidents.
A commercial property policy can address these perils and more, depending on the way it’s written. The key is discussing with your insurance agent the types of equipment, buildings and inventory you have; how you obtain materials; where you use materials, tools, and equipment; and how you transport them. Your agent will also want to know about your security protocols both on your business premises and at jobsites. In construction, your mobile tools and equipment are vital to your success, and how you use and protect them will help determine the coverage you need and how much you pay for it.
To survive a disaster or a supply chain disruption, you will also need business income insurance, which comes with or can be added to your commercial property policy.
Commercial Auto Insurance for Construction Companies
Insuring your vehicles for damage and your drivers and company for liability is a step no construction company can avoid. It’s expensive, but the potential losses from a single accident make business auto insurance essential for construction companies — even if your workers drive their own vehicles.
Commercial auto policies can cover collision damage to your vehicle; non-collision damage from falling or flying debris; and liability payments for injuries to people or harm to their property resulting from an accident. Non-owned auto coverage is often purchased by construction companies that allow employees to drive their own vehicles, because any accidents occurring in the course of their work for you could draw your company into a liability claim. And uninsured motorist coverage is becoming more important as the number of people driving without insurance has increased, according to a 2025 report by the Insurance Research Council.
Note that self-propelled equipment, such as cherry pickers and earth movers, are not covered under commercial auto and must be insured under a commercial property policy.
Builders Risk Insurance for Construction Companies
If you are a general contractor, you should know about builders risk insurance, which insures the structure you are erecting, renovating or remodeling as well as the on-site equipment and building materials.
It is a temporary coverage that ends when the project is complete, and it is usually required if the project is financed through a lender. It can be extended to insure the costs of cleanup if a covered peril damages or destroys a building during the course of construction.
Commercial General Liability Insurance for Construction Companies
Construction companies are typically required to carry general liability insurance by state licensing boards, though mandates differ by jurisdiction. This coverage helps pay for injuries to non-employees or damage to their property due to accidents for which your company is found liable. It can apply to harm that occurs at your primary premises as well as on your jobsites.
Commercial general liability insurance, often termed CGL or even just GL, can cover something as simple as breaking a customer’s sliding glass door to something as complex as a disability, lost income, and rehab costs stemming from a visitor’s injury at a jobsite. With the increase in awards from liability lawsuits, construction companies should make sure they have proper coverage.
Also, ask your insurance agent about completed operations coverage. It is often included to some degree in a CGL policy, but if not, you can add it. It helps pay for damage that results after you have completed a job from faulty installation or construction.
Other Liability Insurance for Construction Companies
Professional Liability
Licensed contractors in the construction field should consider adding professional liability insurance, which steps in if you make an error or omission in the course of your licensed professional duties that results in a financial loss to a customer. This particularly applies to design/build firms, landscape architects, and others who provide advice, analysis, or design services.
EPLI
All construction companies should consider employment practices liability insurance (EPLI), which covers legal complaints about hostile workplaces, discrimination and wrongful hiring or firing practices.
Pollution Liability
Most construction companies are exposed in some way to the risk of causing an environmental incident or pollutant release. Whether that’s puncturing a fuel tank, severing a sewer line, or causing a chemical leak, you could be charged for the cost of containment, cleanup, and remediation. Pollution insurance helps defray the loss.
Wrap-up or OCIP/CCIP
For large construction firms, especially general contractors, having one insurance policy that encompasses liability coverages for the GC and all subcontractors is often recommended. It can be an owner-controlled insurance policy (OCIP) or a contractor-controlled policy (CCIP), and, though expensive, it can ensure there are no gaps in protection and that all participants are collaboratively insured.
Umbrella & Excess Liability
Because construction industry accidents are often very expensive to remedy, contractors may wish to expand the dollar amount of their coverage. An umbrella insurance policy can do that for all your firm’s liability policies at once. It steps in at a predetermined dollar amount when the underlying coverage, such as commercial auto or general liability, runs out. Excess liability insurance is similar except that it applies to only one primary policy; therefore, you would need separate excess coverage for each liability policy whose limits of insurance you want to bolster.
With all the television and billboards advertising plaintiff lawyers, it’s important to keep in mind that you can be sued when you really aren’t at fault. That is why most liability policies provide some lawsuit defense costs to help pay your lawyer’s fees.
Workers Compensation Insurance for Construction Companies
Construction is the industry with the highest number of workplace fatalities and is second-riskiest when it comes to non-fatal injuries, according to the Bureau of Labor Statistics.
Workers compensation insurance pays for medical bills, recovery, and lost income for employees who are injured on the job. It also shields your company from lawsuits for further compensation unless gross negligence can be proven.
Handling the Complexity of Construction Insurance
An insurance agent who specializes in construction insurance can understand your risks, your budget/payment plan needs, and your coverage gaps. Because needs change based on your projects, it’s best to build a relationship with a construction insurance agent who can shepherd you through the policy purchase and renewal process.
A construction insurance professional can also help you get surety bonds and can review your contracts for potential insurance liabilities you might have missed. Find an agent specializing in the construction industry.