In the construction industry, general contractors and subcontractors are often faced with myriad legal and other requirements, especially regarding insurance. Successfully navigating these requirements is crucial for mitigating risks and ensuring smooth project execution. With this in mind, the dedicated team at Lupton & Luce stands ready to assist.

Understanding Legal Requirements

The first step contractors should take is to understand relevant legal requirements related to insurance in the construction industry. These requirements can vary by state and type of construction work being performed. To ensure compliance, it’s essential to consult with a legal expert or an insurance professional familiar with the industry.

Identifying Necessary Insurance Policies

Several types of insurance policies may often be required by either laws or clients, such as the following:

• General liability insurance—This policy may cover claims for third-party bodily injuries and property damage that may occur during the construction process.

• Workers’ compensation insurance—This is a legal requirement for many businesses in most states, including New York, and can cover medical expenses and wage replacement for workers who are injured on the job or develop work-related illnesses.

• Professional liability insurance—This can cover claims arising from errors or omissions in the services provided by a contractor or subcontractor.

• Commercial auto insurance—This can cover a contractor’s motor vehicles. Auto insurance is typically legally required for businesses that use vehicles.

• Commercial umbrella insurance—This type of insurance can provide a secondary layer of liability coverage, which may be necessary to satisfy the requirements of developers and clients and ensure eligibility for jobs.

Ensuring Adequate Coverage

Simply having the aforementioned types of insurance is not always enough, as not all policies are created equal. General contractors and subcontractors must also ensure adequate coverage within their policies. This means insurance should provide sufficient limits to cover potential losses, and various endorsements may also be needed. Working with an insurance broker can help you determine the appropriate coverage amounts.

Staying Diligent to Satisfy Requirements

For general contractors, it’s crucial to verify that all subcontractors have the necessary insurance coverage. This can be done by requesting certificates of insurance (COIs) from each subcontractor. If a subcontractor lacks adequate insurance, the general contractor could be held liable for any damages or injuries.

Additionally, all contractors should remain apprised of any legal changes regarding insurance requirements. Laws may be adjusted over time, and ignorance or inattention could incur significant financial and legal penalties, including fines and even being forced to shutter a business altogether.

Get the Right Coverage

With over 80 years of experience serving businesses in Riverhead, New York, and throughout the Long Island area, the dedicated staff at Lupton & Luce is well-positioned to help contractors address their coverage needs. Visit our website or call 631-727-4114 to learn more or to get a personalized contractors insurance quote.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.