7 Best Construction Insurance Companies for 2024

What is Construction Insurance?

Construction insurance encompasses various policies designed to safeguard construction projects. The term broadly refers to insurance linked to construction endeavors rather than constituting a distinct type itself.

Determining the appropriate coverage hinges on multiple factors: one’s role in the project (contractor, property owner, subcontractor), the entity procuring (individual or business), and the specific property requiring coverage.

Notably, insurers commonly bundle multiple policies into trade-specific packages like electricians’ or plumbers’ insurance. Below, we detail the prevalent policies commonly utilized within the construction sector.

 

Types of Construction Insurance

A property owner embarking on a construction project might aim to secure diverse protections concerning the endeavor, such as safeguarding the building and materials during transit.

Conversely, a contractor engaged in the same project might necessitate varied coverage types like general liability and commercial auto, contingent on the contract’s specifics. Here is further detail on the array of coverage options accessible in such scenarios.

 

1. General Liability Insurance

General liability insurance functions as a policy shielding against legal responsibilities linked to third-party claims involving bodily injury, property damage, or advertising-related injuries. Its purpose is to aid businesses in mitigating financial losses and covering legal costs arising from accidents or incidents occurring on their premises or due to their operations.

 

Explanation of Coverage

General liability encompasses various liabilities that businesses encounter, including:

• Bodily injury: Should an individual sustain injuries on your premises or due to your operations, this insurance can cover their medical costs and related damages.
• Property damage: If your business causes harm to another party’s property, like a client’s building, this insurance can handle repair or replacement expenses.
• Advertising injury: In cases of alleged false advertising, libel, or slander against your business, general liability can cover legal fees and damages.

 

Benefits of Having General Liability Insurance

General liability offers several advantages for businesses, including:

• Safeguarding against financial losses: This insurance shields businesses from substantial financial setbacks arising from lawsuits or claims.
• Legal representation: Coverage extends to legal expenses, aiding in defending your business in court.
• Peace of mind: Assurance that your business is shielded from unexpected accidents or incidents allows for peace of mind, enabling a focus on operations.

 

2. Worker’s Compensation Insurance

Workers’ compensation insurance is indeed tailored to offer coverage for employees affected by work-related injuries or illnesses. Its main objectives are to support employees by covering medical expenses and lost wages, while also protecting employers from financial losses and legal expenses linked to workplace injuries or illnesses.

 

Explanation of Coverage

Workers’ compensation insurance generally includes coverage for the following:

• Medical costs: This insurance can cover medical treatment expenses, encompassing hospitalization, surgeries, and rehabilitation.
• Wage replacement: If an employee cannot work due to a work-related injury or illness, workers’ compensation can offer benefits to replace lost wages.
• Death benefits: In the unfortunate event of an employee’s demise due to a work-related injury or illness, this insurance can provide benefits to support their dependents.

 

Benefits of Having Worker’s Compensation Insurance

Workers’ compensation provides numerous benefits for businesses:

• Financial protection: Safeguards businesses from significant financial losses resulting from workplace injuries or illnesses.
• Compliance with state laws: Ensures adherence to state regulations mandating employers to have this insurance for employee protection.
• Reducing legal expenses: Helps prevent costly lawsuits from injured employees or their families by offering coverage and support.

 

3. Builder’s Risk Insurance

Builder’s risk insurance is a specific policy crafted to protect against damages or losses that arise during construction or renovation projects. Its primary goal is to safeguard builders and contractors from financial losses resulting from unforeseen events that occur during the construction phase.

 

Explanation of Coverage

Builder’s risk typically covers:

• Property damage: Protects the building, structure, or materials involved in the construction project against various damages.
• Theft and vandalism: Coverage for theft or vandalism incidents that may occur at the construction site.
• Business interruption: Offers compensation for lost income and expenses caused by a covered loss resulting in delays to the construction project.

 

Benefits of Having Builder’s Risk Insurance

Builder’s risk insurance indeed provides numerous benefits for builders and contractors:

• Financial security: Protects against significant financial losses arising from damages or losses during the construction project.
• Peace of mind: Ensures protection from unexpected events, allowing focus on work without undue worry.
• Contractual adherence: Complies with contractual requirements that often mandate builder’s risk as part of the construction project.

 

4. Professional Liability Insurance

Professional liability insurance, also known as errors and omissions, is a policy specifically crafted to provide coverage for professional mistakes or negligence. Its primary aim is to protect professionals from financial losses resulting from claims made by clients regarding errors, omissions, or negligence in the services they render.

 

Explanation of Coverage

Professional liability insurance commonly includes coverage for:

• Legal expenses: Coverage for the costs associated with defending a professional in legal proceedings or lawsuits.
• Settlements and judgments: Provides financial coverage if a professional is held responsible for damages, encompassing settlements or court-awarded judgments.
• Reputational harm: Offers coverage for damages to a professional’s reputation arising from claims or legal actions.

 

Benefits of Having Professional Liability Insurance

Professional liability offers several advantages for professionals:

• Financial protection: Shields professionals from substantial financial losses due to claims or lawsuits filed against them.
• Peace of mind: Assurance of protection from potential claims or lawsuits enables focus on work without undue concern.
• Contractual compliance: Meets the requirements of many contracts that mandate professionals to have professional liability as part of their services.

 

5. Commercial Auto Insurance

Commercial auto insurance is a type of policy that provides coverage for vehicles used for business purposes. This policy helps protect businesses from financial losses resulting from accidents, theft, or other damages to their vehicles.

 

Explanation of Coverage

Commercial auto insurance generally includes coverage for:

• Liability: Provides coverage for damages or injuries for which a business might be deemed responsible in an accident.
• Physical damage: Covers damages to the business’s vehicles caused by accidents, theft, vandalism, or other specified perils.
• Medical expenses: Offers coverage for medical expenses of the driver or passengers injured in an accident involving the business’s vehicle.

 

Benefits of Having Commercial Auto Insurance

Commercial auto insurance indeed offers several advantages for businesses:

• Financial safeguarding: Shields businesses from substantial financial losses caused by accidents or vehicle damages.
• Legal compliance: Meets the mandatory minimum liability requirements imposed by most states for business-owned vehicles.
• Peace of mind: Assurance that the business’s vehicles are protected enables focus on work without undue worry.

 

6. Equipment Insurance

Equipment insurance is a specialized policy tailored to cover equipment utilized by businesses. Its primary function is to shield businesses from financial losses arising due to damages or theft of their equipment during operations.

 

Explanation of Coverage

Equipment insurance typically covers the following:

• Accidental damage: The policy can provide coverage for accidental damages to the equipment caused by events such as fire, water damage, or impact damage.
• Theft: The policy can also provide coverage for the theft of equipment.
• Breakdowns: Some equipment policies can provide coverage for breakdowns or malfunctions of the equipment.

 

Benefits of Having Equipment Insurance

Having equipment insurance provides numerous benefits for businesses, including:

• Protection from financial losses: Equipment can protect businesses from significant financial losses resulting from damages or theft of their equipment.
• Continuity of business operations: If the equipment is damaged or stolen, the equipment policy can help cover the cost of repairs or replacement, allowing businesses to continue their operations without interruption.
• Customizable coverage: Equipment policies can be customized to meet the specific needs of the business, ensuring that the policy covers the equipment that is most essential to the business.

 

7. Umbrella Insurance

Umbrella insurance serves as an additional liability coverage extending beyond the limits of other policies. It’s specifically crafted to safeguard businesses from financial losses stemming from lawsuits or claims that surpass the coverage limits of their existing policies.

 

Explanation of Coverage

Umbrella insurance commonly offers coverage for:

• Bodily injury: Protects businesses from financial losses due to injuries suffered by third parties on their property or due to business operations.
• Property damage: Shields businesses from financial losses caused by damages to third-party property occurring on their premises or due to their operations.
• Legal defense expenses: Provides reimbursement for legal fees and court costs related to defending against covered lawsuits or claims.

 

Benefits of Having Umbrella Insurance

There are several benefits to having umbrella insurance, including:

• Additional liability protection: Umbrella insurance provides additional liability protection above and beyond the limits of other policies, reducing the risk of financial losses resulting from lawsuits or claims.
• Comprehensive coverage: Umbrella insurance covers a wide range of potential liabilities, providing businesses with comprehensive protection.
• Affordable premiums: Umbrella insurance is typically affordable, providing businesses with additional protection at a reasonable cost.

 

Finding the Best Construction Insurance Companies

Many construction insurance companies offer specialized policies for the construction industry. In an ideal world, businesses, contractors, and homeowners can buy all of their policies from one provider to save time, energy, and money. Buyers should also consider several factors when choosing an insurer:

• Financial Strength: contractors and commercial developers should consider how financially established their insurer is. In the case of a major catastrophe, the insurer could be placed under a large financial burden. Ideally, the insurer you choose is one of the more well-established companies with a strong financial outlook.
• Customer Service and Reputation: policyholders will frequently need to interact with their insurance provider, including when a claim is filed, a policy is updated, or a question about the policy needs to be answered.
• Coverage: it is also important to make sure that the coverage offered by the policy is complete. The protection provided by the policy should at least meet the minimum state and contractual requirements, and hopefully much more.
• Cost: The cost of the policy is usually not going to be visible until you’ve shared many of your personal and project details with the insurer. So it’s worth finding multiple quotes before settling down with a provider. Buyers should also ask insurers about the discounts that they offer because frequently, project sponsors and contractors can save on the final cost of the policy just by applying discounts that they already qualify for.

 

Best Construction Insurance Companies

Here are complete list of the best builders risk insurance providers:

 

1. Chubb

Chubb holds the title of being the largest publicly traded company for property and casualty worldwide and dominates as the primary commercial insurer in the United States.

Though construction-related policies and builders’ risk represent only a part of its overall portfolio, Chubb presents an outstanding collection of products tailored specifically for construction experts.

Advantages:

• Provides a broader selection of construction policies and customizable options compared to competitors.
• Boasts top-notch financial strength ratings and notably superior customer satisfaction in contrast to other insurers.

Disadvantages:

• Tends to have higher pricing than other providers offering construction insurance

Chubb excels in providing highly specialized and flexible builder’s risk and other construction policies. Their exceptional flexibility in tailoring policies to various scenarios sets them apart from most providers, making them our top recommendation. Chubb’s builder’s risk offerings cater to a wide clientele, including commercial developers, large contractors, small construction businesses, and homeowners.

As the largest publicly traded insurer globally, Chubb stands out for its robust financial stability. Chubb boasts top ratings from AM Best (A++), Moody’s (Aa3), and S&P (AA), positioning it among the most financially secure insurers worldwide. This ensures buyers have no qualms about their ability to handle claims effectively.

While Chubb’s commercial policies may come at a higher cost compared to certain competitors, customers typically express contentment with the price they pay for coverage due to its highly customized nature and the company’s stellar customer service. To ascertain the cost of Chubb’s builder’s risk policy, accessing their website or connecting with local agents and brokers can offer specific pricing based on project details.

 

2. Nationwide

Nationwide provides an extensive range of insurance solutions tailored for construction experts, featuring an impressive builders’ risk policy.

Advantages:

• Known for competitive pricing among leading commercial insurers
• Offers a full array of insurance products for contractors alongside builders’ risk

Disadvantages:

• Received an average rating in a recent J.D. Power survey on customer satisfaction

Nationwide offers highly adaptable builder’s risk policies, allowing for tailored endorsements covering specific needs like debris removal, ordinance or law aspects, and pollutant cleanup, among others.

It’s a top pick for general contractors due to its comprehensive range of insurance beyond builder’s risk, encompassing general liability, inland marine (covering mobile equipment and tools), business auto, workers’ compensation, errors and omissions, and more.

The convenience of managing multiple policies under one provider saves considerable time and resources for contractors, a service Nationwide ensures for their convenience.

According to data from the National Association of Insurance Commissioners (NAIC), Nationwide records a lower frequency of customer complaints compared to many competitors. In the most recent U.S. Small Commercial Insurance Study by J.D. Power, Nationwide achieved a satisfaction score of 828 out of 1,000, closely aligning with the industry average. These factors collectively signify Nationwide’s reliability in meeting customer needs.

In terms of financial performance, Nationwide secures high credit and financial strength ratings from AM Best, Moody’s, and S&P, earning ratings of A+, A1, and A+ respectively. This underscores Nationwide’s robust financial standing and consistent track record.

With its exceptional array of construction policies, positive customer feedback, and strong financial position, Nationwide stands out as our choice for the Best Builders Risk Insurance for General Contractors. Moreover, it serves as an excellent option for various small construction businesses and even homeowners.

 

3. State Farm

State Farm, a prominent provider catering to various customer segments, emerges as one of our top choices for builders’ risk due to its financial stability, coverage diversity, and stellar reputation among customers.

Advantages:

• State Farm excelled in a recent J.D. Power customer satisfaction study, securing the leading position
• It exhibits stronger financial standing compared to any other company evaluated

Disadvantages:

• Detailed information on its builder’s risk policies is limited unless discussed with an agent, posing a drawback in accessing policy specifics independently

State Farm’s builder’s risk policies encompass coverage for various aspects, including damage to buildings, comprehensive general liability, equipment breakdowns, and materials and supplies. Additionally, State Farm offers optional coverage for risks like ordinance and municipal law or

identity theft, providing the option to bundle other policies from different commercial lines for convenience and cost efficiency. State Farm’s agents collaborate closely with clients to craft a tailored policy that meets their specific needs.

State Farm enjoys an outstanding reputation among customers, earning an A+ rating from the Better Business Bureau. This signifies the company’s proficiency in addressing customer concerns and delivering satisfactory service. Notably, in J.D. Power’s recent Small Commercial Insurance Study, State Farm achieved the highest customer satisfaction score in its category, scoring 856 out of 1,000, surpassing the industry average by 14 points.

 

4. Zurich

Zurich, among the most seasoned insurers we assessed, stands as one of our top recommendations for builder’s risk coverage. Renowned for insuring businesses of varying scales, they rank as one of the leading providers of builders’ risk.

Advantages:

• Zurich provides dedicated builders risk policies tailored for both new home construction and remodels, catering to specific project needs
• They offer customers an online quote tool, facilitating easier price comparisons across various policies for enhanced decision-making

Disadvantages:

• As Zurich operates through subsidiaries in the U.S., assessing customer experience may pose more challenges compared to other insurers, potentially impacting transparency and evaluations

Zurich, an international entity headquartered in Switzerland, operates via various subsidiaries, including Farmers and US Assure, the latter overseeing builders risk programs within the U.S. region.

US Assure’s Builders risk policies extend to residential and commercial projects of varying sizes, reaching up to $75 million in value, encompassing remodeling and installation. They also offer numerous extensions that can eliminate common exclusions found in standard builders’ risk policies.

Alongside Zurich’s robust policy offerings and financial stability, the company holds a favorable reputation among its customers. Zurich North America holds an A+ rating from the Better Business Bureau, accredited for meeting the BBB’s trustworthiness and fairness standards in customer dealings.

While not listed in J.D. Power’s Small Commercial Insurance Study, complaint data from the NAIC indicates Zurich receives significantly fewer complaints than the average relative to its size, indicative of high customer satisfaction.

Zurich earns recognition as the Best Builders’ Risk Insurance Company for New Home Construction due to their direct yet adaptable builders’ risk policies, well-suited for most new home construction projects.

Through US Assure, tailored policies for new home construction are available. Additionally, Zurich stands out as the Best Builders Risk Insurance Company for Renovations, offering remodel-specific builders risk coverage.

 

5. AIG

AIG is a highly reputable provider of builder’s risk insurance and ranks among our top recommendations. A key factor behind our recommendation is AIG’s direct collaboration with clients to customize available policies according to the unique specifications of their projects, making them particularly suitable for medium-sized or larger firms in need of comprehensive coverage.

Advantages:

• Boasts an in-house team of claims professionals dedicated solely to builders’ risk.
• Features an industry-leading risk management team that assists clients in mitigating losses and reducing expenses.
• Ensures promptness by guaranteeing 50% payment within 7 days following the approval of a claim.

Disadvantages:

• Acquisition of quotes and purchase of AIG policies necessitates engagement with a broker

AIG boasts over a century of experience in the insurance sector, with extensive expertise specifically in builders’ risk coverage. In comparison to other insurers, AIG presents one of the most comprehensive builders’ risk portfolios, tailor-made for commercial clients with intricate needs.

Their coverage extends to both single and master builder’s risk policies, catering to projects in the United States and internationally.

In handling claims, AIG operates with a dedicated in-house team of professionals specializing in builders and risk claims, proficiently managing complex construction projects. Notably, upon claim approval, AIG commits to disbursing at least 50% of the total payment within a week a benefit not commonly offered by other insurers.

Beyond claims assistance, AIG’s builder’s risk team provides extensive risk management services aimed at proactively reducing the likelihood of future losses.

AIG’s profound industry knowledge has garnered positive customer feedback, reflected in their A- rating from the Better Business Bureau, signaling commendable customer service and issue resolution. Additionally, AIG maintains a low NAIC complaint index, receiving about a third of the complaints compared to competitors relative to its market share.

Their stellar reputation is further reinforced by exceptional financial strength ratings, including an A from AM Best, an A2 from Moody’s, and an A+ from S&P, affirming AIG’s robust financial stability and ability to meet rightful claims.

 

6. Liberty Mutual

Liberty Mutual, established in 1912, boasts over a century of experience in delivering diverse solutions. In recent years, the company has broadened its array of builder’s risk offerings to better cater to the requirements of major contractors and has augmented its risk engineering services to aid policyholders in preempting claims.

Advantages:

• Offers highly adaptable policy alternatives designed to accommodate various needs within the builders’ risk realm.

Disadvantages:

• Exhibits slightly lower financial strength ratings and customer reviews compared to other companies highlighted in this guide

Liberty Mutual’s builder’s risk policy is notably flexible, providing expanded limits for specific risks and an extensive array of optional coverage extensions tailored to address specific business needs or concerns.

These enhanced coverages encompass various aspects such as blueprints and construction documents, construction trailers and contents, contract change orders, delay in completion, ordinance, or law, among others. Liberty Mutual’s website details many of these coverage options, enabling customers to explore their choices before commencing the quote process.

 

7. The Hartford

The Hartford stands out as a top choice for builders’ risk, earning high scores across various evaluated categories. It offers policies suitable for a diverse clientele and various construction projects.

Advantages:

• Offers a wide array of coverage extensions, including protections for risks like delay-in-completion and soft costs, safeguarding businesses from additional risks.
• Features a flexible deductible policy that can lead to cost savings in specific situations.
• Customers can utilize The Hartford for the majority, if not all, of their requirements.

Disadvantages:

• Received lower ratings than usual in a recent customer satisfaction survey.
• Policies are slightly pricier compared to offerings from lower-cost competitors.

The Hartford does not specialize exclusively in construction-related products. However, its team is highly experienced in providing policies for construction projects and working with contractors and construction businesses.

The company offers a variety of policy options for builder’s risk, with all-risk coverage and several extensions for items like debris removal, extra expense, delay in completion, and adjacent property.

Hartford also offers many other construction-related options, including liability insurance for contractors and construction, workers’ compensation, and commercial auto insurance.

Hartford also has a good reputation with its customers, currently carrying an A+ rating with the Better Business Bureau. Unfortunately, J.D. Power’s most recent Small Commercial Insurance Study gave Hartford a customer satisfaction score of 819 out of 1,000, which was the lowest rating in the study. That said, this is lower than the company has scored historically and could be related to business disruptions that occurred during COVID, which should subside moving forward.