In this article, we’ll explore the most common jobsite safety risks — and what contractors can do to improve safety for all parties involved. 

Common jobsite safety risks

According to the Occupational Safety and Health Administration (OSHA), almost 3 out of 100 full-time workers were injured on the job in 2019. In that same year, 1,061 construction-related fatalities were recorded. 

Based on a history of site inspections and recorded injuries, OSHA developed the Focus Four initiative to highlight the four most common jobsite hazards:

1. Falls: Employees are often injured by falling through unmarked or unguarded holes in walking surfaces, and slips and trips can be the result of materials or tools improperly placed throughout the jobsite. 
2. Caught-in or between: Injuries or fatalities could occur when loose clothing gets caught in belts or pulleys while heavy equipment and foundation walls present two immovable objects that can crush or suffocate an employee. 
3. Struck-by: Building materials being unloaded overhead by cranes or booms frequently result in struck-by incidents. 
4. Electrocution: Contact with overhead power lines and electrical power boxes presents risks that can lead to serious injury or death during the construction phase. 

It’s no surprise that the 10 most frequent OSHA violations mirror the Focus Four risks: Fall protection, ladders, and scaffolding accounted for 60% of the top violations in 2021. 

Risks to employees are a top priority for contractors, and threats to health and safety aren’t the only cause for concern. Unsafe practices on the site could lead to construction delays, legal fees to defend violations, and breach of contract if safety issues are non-compliant with contract terms. 

7 best practices to improve construction site safety 

Here are some of the best steps that contractors can take to maintain safety and compliance standards on construction sites. 

1. Make safety a priority

Safety starts at the top of the organization. Owners and company leaders need to prioritize safety within their company culture. When compliance and accident prevention are part of the daily messaging and work routine, everyone becomes involved in safer operations. 

Keep in mind that any safety program’s success will hinge on consistent messaging and constant interaction with employees. 

2. Create a comprehensive site safety plan

A comprehensive and actionable safety plan will help meet compliance standards and reduce risk on the jobsite. 

At a minimum, a quality safety plan will include the following: 

• A description of each project: its scope and location plus general site conditions 
• Description of identifiable hazards on the project jobsite
• Contact information for key safety and emergency personnel
• Procedure and protocol for handling common safety issues and emergencies 
• A description of local, state, and federal safety regulations
• Instructions for reporting safety incidents or hazards, including “near misses” 
• Feedback instructions for the plan itself

Contractors should review and update their safety plans periodically.

3. Conduct regular jobsite safety training

Once a safety plan is in place, the key to avoiding mishaps revolves around training. It’s especially important to train new hires or those who don’t have construction site experience. By the same token, training should be a regular exercise for employees who are veteran construction workers since safety reinforcement will help the cause. 

4. Service and update equipment regularly

Old, worn equipment and tools can malfunction or break and cause injury. New, ergonomic tools and equipment have benefits that are two-fold.

Modern tools of the trade can help productivity and reduce body strain that can lead to musculoskeletal injuries. This investment can also help cut down on struck-by and caught-in incidents, two common hazards on the jobsite. 

5. Keep open lines of communication

After a jobsite is evaluated for potential hazards, distribute information throughout the organization so that all stakeholders and employees are aware of any adverse conditions. Modern technology, including smart devices and construction management software, makes real-time communication simple between the office and the jobsite. 

6. Document & track safety incidents

As the saying goes, “you can’t manage what you don’t measure.” Managing and reducing safety requires contractors to keep a careful record of injuries as well as near misses. 

Modern construction software platforms include tools to record and report on safety incidents. Regular safety reports help managers identify the root cause of common hazards and reduce future impact. Proper and detailed documentation could make a difference in a legal case in which responsibility for a mishap must be determined. 

7. Work with your insurance provider

Contractors often carry a variety of insurance policies to protect their company from financial loss in the event of a mistake or accident on the jobsite. Your insurance company has a vested interest in reducing claims, and they can often provide tools and recommendations to reduce jobsite risk – and premium costs. 

Keeping your worksite crews healthy and safe is important in and of itself. But safety is also an essential business practice for construction companies.

The post 7 Ways to Improve Construction Site Safety appeared first on Levelset.

Environmental laws provide the backbone for permitting and reporting requirements on construction projects, while a wide variety of state and municipal laws impose even stricter rules. Failure to follow local and federal environmental requirements can lead to significant financial penalties, civil action, and even criminal charges.

Learn more: Construction & The Law

7 key environmental laws in construction

In construction, environmental regulations generally focus on stormwater, waste disposal, hazardous waste handling, and air quality. On a federal level, most of the environmental laws and regulations that apply to construction companies fall under the purview of the Environmental Protection Agency (EPA), though other federal and state agencies are closely involved. 

The rules can apply to any construction jobsite in the United States. Owners, developers, or contractors who violate them can be subject to significant financial penalties and even jail time.

These seven laws form the basis for most of the environmental laws that construction companies need to follow. For further reading, see the Federal Environmental Requirements for Construction. 

1. Clean Water Act

The Clean Water Act (CWA) established guidelines for discharge of pollutants into water within the U.S. In general, these laws apply to both contractors on the jobsite and the owner of the completed building.

According to CWA Section 402, a construction site must have a permit from the National Pollutant Discharge Elimination System (NPDES) if it is: 

• On an acre or more of land
• A municipal, industrial, or commercial facility that discharges waste or stormwater directly from a point source into a lake, river, or ocean

NPDES permits are issued by states that have obtained EPA approval to issue permits or by EPA Regions in states without such approval. 

EPA Flowchart: Do I need a NPDES permit?

2. National Environmental Policy Act

The National Environmental Policy Act (NEPA) requires federal agencies to assess the environmental effects of their proposed actions prior to making decisions. As a result, this law generally applies to public construction, such as infrastructure projects. This law is administered by the Council on Environmental Quality (CEQ), an executive office of the President. 

Under NEPA, federal construction projects typically require an Environmental Assessment, and may require an Environmental Impact Statement (EIS). 

Under this law, federal agencies must assess the environmental effects of proposed projects prior to starting construction. An environmental assessment and an environmental impact statement may be required. These statements are usually prepared by the federal agency during the preconstruction phase. But contractors should be aware that a project may be delayed or interrupted if the proper assessments — and any required corrections — haven’t been made. 

Some projects or specific types of construction work may qualify as a Categorical Exclusion (CATEX), meaning additional review is not required. An EIS may not be necessary if the assessment shows that the project has no significant impacts. Every federal agency has its own procedures for implementing NEPA requirements, including what qualifies as CATEX.

While the burden for NEPA compliance generally falls to the agency owner, contractors need to understand and follow the environmental requirements to both produce an accurate bid and reduce delays or penalties during construction.  

3. Resource Conservation and Recovery Act (RCRA)

The Resource Conservation and Recovery Act (RCRA) is a federal law that governs the generation, transportation, treatment, storage, and disposal of hazardous waste. Hazardous waste includes common construction and demolition (C&D) waste like lead pipes, adhesives and coatings, solvents, asphalt waste, and many others. 

The RCRA has three categories of generators: 

1. Large Quantity Generators (LQGs): contractors that generate 1,000 kgs (~2,200 lbs) of hazardous waste per month, or more than 1 kg (2.2 lb) of acutely hazardous waste per month
2. Small Quantity Generators (SQGs): generate more than 100 kgs but less than 1,000 kgs of hazardous waste per month
3. Conditionally Exempt Small Quantity Generators (CESQGs): generate 100 kgs or less of hazardous waste, and 1 kg or less of acutely hazardous waste, per month. 

According to the EPA, most construction, demolition, and renovation companies are considered CESQGs. Construction material suppliers, especially those that produce or distribute solvents and other chemicals, may qualify as LQGs or SQGs. View pages 12-13 of RCRA in Focus: Construction, Demolition, and Renovation for a checklist of requirements for LQGs and SQGs. 

Though contractors may be exempt from RCRA requirements, they still need to comply with state and local laws that apply to hazardous waste disposal and storage. 

4. Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as “Superfund,” covers improper disposal or intent to dispose of hazardous waste. View the list of chemicals subject to CERCLA here. The Superfund includes money to pay for cleanup when the parties responsible cannot be identified. 

However, the EPA does have the authority — and responsibility — to determine liability for hazardous waste pollution and hold Potentially Responsible Parties (PRP) accountable.

Under 42 U.S.C. § 9607, there are four general categories of PRPs: 

1. Current owner or operator
2. Past owner or operator
3. Arranger
4. Transporter   

Contractors and engineers have been found liable under CERCLA in a variety of court cases. But don’t assume that this law only applies to those who dispose of hazardous waste on a jobsite. As the court found in Kaiser Aluminum & Chemical Corp. v. Catellus Development Corp., a contractor can be liable even when they move contaminated soil to an uncontaminated area of the same jobsite. 

A construction company that is considered a PRP will need to negotiate a settlement agreement with the EPA. Failure to comply with the agreement can result in daily penalties — up to $62,689 as of January 2022.

5. Endangered Species Act

The Endangered Species Act (ESA) was created to protect endangered or threatened fish, wildlife, and plants, including their natural environment. In construction, ESA enforcement isn’t limited to the jobsite itself, but to the “Action Area” that is impacted by construction activity and stormwater runoff.  

There are two federal agencies responsible for implementing ESA: 

• US Fish and Wildlife Service (USFWS)
• National Marine Fisheries Service (NMFS), also known as the US National Oceanic and Atmospheric Administration (NOAA) Fisheries Service

A Permit for the Incidental Taking of Endangered and Threatened Species (also known as an “incidental take permit”) is required if construction activity will harm or harass a threatened or endangered species. View the ESA species list here.

FWS offers a variety of resources for contractors, engineers, and project owners, including an interactive map tool that allows users to identify potential impacts and review suggested conservation measures.

ESA violations can result in both criminal and civil penalties of up to $50,000 per violation and up to six months in jail. 

6. Emergency Planning and Community Right-to-Know Act (EPCRA)

The Emergency Planning and Community Right-to-Know Act (EPCRA) requires contractors to report on the storage, use, and release of hazardous substances (as defined by CERCLA).

The EPA has found that most construction sites are not subject to EPCRA planning requirements. However, certain jobsites may fall under EPCRA regulations. When this law applies, contractors and other operators must post material safety data sheets (MSDS) for the chemicals used, stored, or released on the jobsite. 

Every state has its own commission, which is responsible for implementing EPCRA provisions within its state. They must report to the State Emergency Response Commissions (SERC) and/or the Local Emergency Planning Committees (LEPC) any releases of hazardous substances at the construction site if the amount released meets or exceeds the reportable quantity.

Non-compliance with EPCRA can result in penalties of up to $27,500 per day.

7. Clean Air Act (CAA)

The U.S. Clean Air Act (CAA) regulates air emissions from stationary and mobile sources. While most people are familiar with EPA’s enforcement of power plant or automotive emissions standards, the Clean Air Act also applies to construction activity, as well. While the EPA is responsible for enforcing CAA compliance, it can grant governing authority to the state.

Over the years, the EPA has tightened emissions standards for non-road engines, like those used in heavy construction equipment. These increasingly strict standards only apply to new equipment, with equipment manufacturers bearing the heaviest burden of compliance. The EPA also administers the Diesel Emissions Reduction Act, which funds retroactive emissions improvements on existing diesel engines through national and state programs. 

The Clean Air Act also comes into play with the construction of power plants and other facilities requiring an air permit. Every state has its own permitting process and consequences for failure to comply. Contractors that begin construction work before the facility is properly permitted can be subject to penalties. 

For example, according to the New York Department of Environmental Conservation, “Persons commencing work on such a project before obtaining the required permits, and any contractors engaged in such work, are subject to enforcement actions by the DEC.”

Enforcement actions include fines, civil and criminal penalties, and remedial orders to remove structures or materials from the jobsite.

One of the more common hazardous air pollutants in construction, asbestos, is also regulated under the National Emission Standards for Hazardous Air Pollutants (NESHAP). Prior to the demolition and renovation of buildings where asbestos is likely to be present, owners and/or contractors typically need to notify the appropriate authority (typically a state agency) before activity can occur. On projects where the amount of asbestos is over a certain threshold, contractors must follow specific asbestos control measures, and a trained monitor must be on site to observe the work.

Penalties for violating the Clean Air Act vary depending on the offense. In 2021, Alabama brought a lawsuit against a contractor for “unauthorized open burning of imported vegetation,” an alleged violation of the CAA that carried a penalty of up to $25,000 per day.   

Top activities contractors need to plan for

Handling hazardous materials & toxic substances

The Resource Conservation and Recovery Act (RCRA) gives the EPA the authority to control hazardous waste from the cradle to the grave. This includes waste generation, transportation, treatment, storage, and disposal. Amendments have added regulations to address underground petroleum tanks and hazardous waste storage. Under this law, the EPA may designate state entities to fulfill the requirements.

The EPA enforces two laws relating to the storage and handling of hazardous materials and toxic substances, including record-keeping and reporting rules for businesses. The Toxic Substances Control Act establishes reporting, record-keeping, and testing requirements for toxic materials. These include polychlorinated biphenyls (PCBs), asbestos, radon, and lead-based paint.

In addition, the Emergency Planning and Community Right-to-Know Act requires construction companies (and other businesses) to report on the storage, use, and releases of hazardous substances to federal, state, and local governments.

Managing stormwater runoff

If your project will disturb one or more acres of land, you may need to get a Clean Water Act permit for the discharge of stormwater runoff from the site. Stormwater permits are issued either through the EPA’s National Pollutant Discharge Elimination System (NPDES) or a state’s permitting authority.

Getting a permit requires you to perform the following steps:

• Submit a notice of intent or permit application to your permitting authority. The notice or application requires you to certify that you will not harm federally listed endangered species.
• Develop and implement a stormwater pollution prevention plan (SWPPP). The plan must describe the physical characteristics of the site, list potential sources of pollutants, and identify the erosion prevention, sediment control, and stormwater management practices that will be implemented.
• If required by your permitting authority, submit a notice of termination when construction activities are complete or when someone else assumes control of the site.

Proper waste disposal

Traditional construction and demolition waste — like wood, roofing materials, insulation, plaster, or sheetrock — often ends up in landfills. However, the EPA regulates the kind of construction waste that is allowed to be disposed of in a landfill.

Contractors must follow specific disposal requirements for certain materials, including hazardous waste and other chemicals. The EPA also regulates the handling and disposal of building materials that contain lead and asbestos.

If contractors generate or handle hazardous wastes at the site, they must follow the regulations included in the RCRA. Potentially hazardous wastes include:

• Cleaners and solvents
• Paints (including lead-based)
• Paint thinners
• Asbestos
• Fluorescent lamps
• Storage tanks for petroleum products

Some states and municipalities have enacted statutes that ban the disposal of certain kinds of construction waste. For example, Vermont law (10 V.S.A. § 6605m) requires projects over a certain size to recycle leftover materials like plywood, clean wood, and scrap metal. Disposing of these items in a landfill can result in fines. 

Mitigating air pollution

The Clean Air Act includes requirements for mobile and stationary sources of contamination. For construction projects, these may include heavy-duty vehicles and equipment and dust emissions from the site. The EPA continues to publish more stringent emission standards for diesel engines. Make sure that equipment and heavy-duty vehicles meet the latest requirements. Contractors must also maintain dust control and erosion control on sites that require it.

Improving energy efficiency

While they are primarily viewed as safety measures, local building codes can be used to promote energy efficiency and reduction of emissions. This can include insulation requirements, wall thickness, and energy efficiency of installed appliances. 

These local codes generally meet or exceed the requirements of federal regulations. Through the permit and inspection process, they help ensure that construction meets local and national requirements. 

The cost of environmental violations

Everyone on a project — including property owners, architects, and contractors — bears responsibility for ensuring that projects meet local, state, and federal requirements for environmental controls. While some contractors view environmental regulations as bureaucratic red tape, violating these regulations can lead to serious consequences.

EPA penalties vary based on the regulation, and reach nearly $75,000 per day for each violation:

• Clean Water Act: up to $54,833 per day, per violation
• Resource Conservation and Recovery Act: up to $74,552 per day, per violation
• Toxic Substances Control Act: up to $39,873 per day, per violation
• Emergency Planning and Community Right-to-Know Act: up to $57,317 per day, per violation

In addition to civil penalties, contractors can be subject to criminal penalties of up to $250,000 and 15 years in prison. And that’s not all: Beyond EPA fines and criminal liability, local and municipal governments have the authority to levy additional punishment for violations of ordinances or building codes, including revocation of a contractor license. 

The post Environmental Regulations in Construction: What Contractors Need to Know appeared first on Levelset.

Scenarios like these stress the need for an electrician to have insurance coverage in place. While the odds of a large loss may be slim, they are still possible. Thus, a strong insurance plan helps you rest easier both on and off the job. 

Why can an electrical contractor use insurance?

Not all accidents that happen on jobs are large-scale and catastrophic. You also need to plan for more common occurrences. For example, an employee who is running wiring to an outlet might break a window. A series of small mishaps like these could put a dent in your profit margins from year to year. 

Insurance policies can help your business cover the costs of both minor and major incidents. You pay pennies on the dollar for coverage that could range into the millions for general liability (GL) insurance, for example. Along with helping preserve your company’s financial health, GL is one of the most important coverage components that owners or general contractors (GCs) will want you to have before they hire you for a project. 

Which types of policies are available to electrical contractors?

Alongside a core business owner’s policy that offers GL and property damage coverage, several other policy types may address different exposures for your business. Below is a list of coverages that can be obtained through a separate policy or amendment to an existing agreement. 

• General liability insurance: A GL policy may help cover the cost of bodily injury or property damage that occurs on a jobsite. For larger projects, an electrical contractor may set their GL amount according to a GC or project owner’s requirements. 
• Umbrella or excess insurance: The standard level of GL in a business owner’s policy may not be enough to meet a job’s contractual requirements — in which case you may want to look at an umbrella or excess liability policy that may extend your coverage for larger claims. 
• Professional liability insurance (E&O): If you draw and sell electrical plans or blueprints, professional liability (errors and omissions) insurance can help cover the fallout from faulty design advice. 
• Workers’ compensation insurance: This coverage can help replace income and cover medical expenses if an employee is injured while on the job. 
• Equipment floater: When transporting building products from one place to another, this floater can help protect the value of items like wiring, outlets, or lighting fixtures. 
• Commercial auto insurance: Much like your personal auto insurance, business auto policies offer coverage for accidents with other parties or damage incurred to your vehicles from events such as hailstorms, for instance. 
• Contractor’s tools and equipment insurance: Also categorized as inland marine insurance, this coverage works like a materials floater but applies to tools and equipment, such as wire strippers and circuit finders, that you own and use in your daily operations. 

Coverages that fall under insurance policies for electricians 

It’s useful to retain insurance for unexpected circumstances. Below are some examples of situations that insurance policies for electricians commonly address: 

 Protecting your team

• Electric shocks: An employee exposed to a live wire could get burned or shocked by high-voltage electrical currents. A workers’ compensation policy may help cover the cost of medical treatment for such injuries. 

• Damaged wall: While carrying a ladder, you may incidentally bust a hole in the finished drywall. General liability may help pay for the cost of repair. 

 Protecting your property

• Damaged equipment: An electrical storm may cause a surge that destroys a generator. Your business property damage insurance may help replace that item. 

• Car accident: Your work van might slide off the road and become undrivable due to tire and axle damage. A business auto policy will help repair the vehicle and get it back into service. 

Protecting your business operations

• Customer slip and fall: A homeowner visiting your office for advice may slip on a wet or icy surface. GL helps pay medical costs and defense costs if a lawsuit arises. 

Note that actual coverage available will depend on the details of each individual policy and may vary from carrier to carrier so it’s important to work with a knowledgeable broker or agent who can help you obtain the coverage you need.

How to get electrical insurance for your business

Before selecting an insurance policy, it may be helpful to seek out an insurance professional that can assist with choosing insurance policies that are suited for your business. An insurance agent or broker who is knowledgeable about your line of work, and the insurance market, can ensure you’re getting adequate coverage. They can also act as an intermediary between you and the insurance company. 

Finding an insurance agent can be done online or by phone. Once you’ve found someone to guide you through the process, you may be asked to provide certain information and documents about your business, including: 

• Your business address
• Tax identification number
• Payroll and sales figures 
• Claims history (if you’ve had any)
• Types of electrical work you do 
  • Whole-house wiring and working on fuse boxes are considered more hazardous than light wiring or adding an outlet into a private residence. The cost of insurance coverage may increase if the jobs you typically carry out are considered more dangerous. 
• Places you perform work
  • Certain areas where you complete jobs might be considered riskier than a private residence or main street commercial business. If you work in an area that an insurer deems high-risk, you may have to pay a bit more for coverage. These locations include: 
    • Airports
    • Government or healthcare facilities
    • Prisons
    • Public roads and spaces

Once this information is gathered and shared with the insurance company, you may be asked to fill out an insurance application. This information is then sent to an underwriter for the insurance company, who may ask you to answer some additional questions or provide more detail about existing information. 

How much does insurance cost for electricians?

How much you pay for electrician’s insurance can depend on the work you perform. It’s important for contractors to inform an insurance company about the scope of their electrical operations. If you’re a master electrician, your advanced skills may allow you to take on bigger and more complex jobs. While this expertise could be a huge advantage for you,  it may also increase the risks you face on the job.

In addition to having costs tied to the nature of your electrical work, other factors could affect the rate you’ll pay, including: 

• Where you do business: You might operate in an area that’s prone to tornadoes or wildfires. These potential perils can increase the cost of your insurance policy. 
• How much coverage you purchase: A GC may require you to raise your GL limits to $3 million from $1 million, depending on the size of the project and the risk that is involved. This additional protection could increase your premium rates. 
• Who performs your work? If you’re a sole proprietor who does inside electrical work on homes, you may pay less for GL insurance than a contractor who has employees and therefore has an increased exposure to risk. 

The next step

Electrical contractor’s insurance is critical to protecting the financial health of your business. With the uncertainty of accidents, injury, or even death occurring on a jobsite, having insurance coverage in place can help safeguard you, your employees, and other stakeholders. It’s important to work with an insurance agent or broker who specializes in coverage for electrical contractors, in order to help you secure the coverage that suits your business needs. 

The post Insurance for Electricians: What It Covers & Why You May Need It appeared first on Levelset.

A construction-to-permanent loan can help owners save time and money — one loan and closing transaction streamlines the financing procedure. However, before starting work on a building financed with a construction-to-permanent loan, both property owners and contractors need to understand the risks.

What is a construction-to-permanent loan?

A construction-to-permanent loan, also called a single-close loan, is a loan used to purchase land and pay for construction costs. When the project is finished, the loan changes into a fixed-rate permanent mortgage loan for 15 to 30 years, depending on the chosen option. Loan funds are used to pay for the lot and construction costs. 

This type of loan is suitable for borrowers who wish to construct a bespoke home from the ground up on a selected property with builders of their choosing.

Typically, building on a property from scratch requires two loans: A construction loan is used to purchase the property and begin building on a home, and a second mortgage loan is needed to finance the completed home. A construction-to-permanent loan allows property owners to achieve both objectives with a single loan. 

Here are the main benefits and downsides of construction-to-permanent loans and how they can streamline the financing procedure.

What are the upfront costs?

The initial charges for a single-close loan are the same as those for any construction or residential loan. These consist of the following:

• The bare minimum down payment is needed by the lender, which is often 20% of the entire loan
• Additional finance expenses like loan application fees and closing costs might be included by the lender

The borrower must start paying interest-only payments on the money drawn from the loan once it closes, and they can use it to pay for building costs.

Contractor risks with a construction-to-permanent loan

There are common risks that are prevalent in every construction loan program. These risks should be a non-issue when contractors have a comprehensive risk management plan in place. 

1. Budgeting problems

The project’s funding may run out if the budget is not adequately managed. Every player in this arrangement faces danger, but the lender is particularly vulnerable. As a result, lenders keep a very close watch on the contractor’s work progress, as well as their invoicing and payment process.

The lender’s responsibility is to ensure:

• The construction loan is always in good standing
• The money that hasn’t been spent is still enough to finish the upgrades
• Draw disbursements are only released for work that has been completed

In order to avoid budget problems, lenders calculate and closely manage the construction loan holdback. They are careful to ensure that every contractor payment is justified by the percentage of work they have performed, as confirmed by the construction progress inspection. Contractors need to pay close attention to detail in their project documentation and draw requests.

This highlights how crucial draw inspections are for keeping balance sheets up to date throughout the project. 

Learn more: The construction loan draw process explained

2. Lack of contingency funds

Without a contingency, unforeseen costs like material price increases may cause the project to go over budget, thereby blocking or delaying completion. 

Incorporating a contingency reserve, like a construction allowance, into the loan is often used to reduce the impact of rising material costs. The benefit could provide a buffer to reduce the financial stress of rising building expenses. The borrower will need to be eligible for the increase in construction costs, and the home may need to appraise at a higher value.

The answer for contractors, however, is straightforward: Don’t finalize a construction contract unless the construction-to-permanent loan allows for unforeseen expenses.

3. Improper project documentation or budgeting

Preventing time-consuming litigation over the construction contract with the help of these pre-checks can ultimately save you both money and time. A balanced project budget is essential to provide a thorough overview of anticipated spending. 

The lender can lower this risk by conducting a thorough project review themselves, or by hiring a qualified vendor to do so before the loan closes.

Unexpected costs raise the risk of default when the project budget is inaccurate. If other crucial paperwork is defective or missing, a project could be considerably delayed before it even begins. This review should, at the very least, examine the appraisal report, the budget, the permits, and the construction contract.

There are deadlines for invoice submissions for a monthly bank withdrawal. If the contractor doesn’t meet the deadline, the invoice might not be sent to the bank and paid until the following month.

Inefficient reporting systems, poor field communication, or a busy finance department are frequently blamed for late billing. To identify areas where systems might be strengthened for prompt invoicing and increased cash flow, think about talking with an outsourced CFO.

Restructuring a few crucial financial processes can help construction companies overcome many cash flow-related financial problems. But if your procedures are perfect and you think the problem is an overworked financial staff, you can think about employing a part-time bookkeeper or financial controller to help balance the burden.

4. Cost-plus agreements raise the chance of default

The borrower pays the contractor for the project’s expenses plus a profit margin in a project governed by a cost-plus contract. These agreements are lawful, but may be detrimental to a lender’s bottom line. 

Under a cost-plus agreement, there is little control over spending during construction. Therefore, it is difficult to assume the project’s total cost until it is completed. Although the borrowers and contractors may feel at ease with this arrangement, the lender likely won’t. 

Lenders require information about the project’s cost, financial management, and schedule before issuing a construction-to-permanent loan. Because there is no control over expenditure with a cost-plus contract, this level of information is not attainable. Lenders don’t want to put themselves in a position where the funds are depleted before the project is complete.

5. Failing to protect lien rights

Though the rules vary by state, the lender on a construction project generally retains lien priority if the property owner defaults on the loan. However, in the interest of protecting their lien rights, financial institutions will typically require all contractors on the project to submit lien waivers for every payment. These documents prove that required payments were made and prevent mechanics liens from being filed on the property unexpectedly. 

Because the lender is typically protected by a higher lien priority, contractors carry enormous financial risk. If the property owner mismanages or misuses the loan funds, the contractor could end up in the hole on the project with limited recourse to collect payment. 

Protect & speed up every payment

Learn how Levelset can help you easily manage your lien rights on every project to ensure your payments are always protected.

Learn more

6. Funds transferred without title updates

By requesting a title update at every draw, a lender can further ensure that no mechanics or subordinate liens would supersede the priority of the mortgage or deed of trust. 

Title updates must contain:

• Current deed details (i.e., grantor, grantee, recording dates)
• Status of property taxes, if available.
• Information about judgments and liens (i.e., creditor, amounts, and recording dates)
• A photocopy of the most recent deed recorded

Ordering title updates typically requires several manual processes and can take three to five days before the report is obtained. This can drag out the schedule and delay payments, which increases the risk of a mechanics lien claim. As a result, lenders sometimes choose to forego the procedure entirely, which increases their risk. 

Recent technological developments have made it possible to change titles digitally, which makes the process considerably faster and more fluid. In many circumstances, this reduces the turnaround time to 24 hours.

7. Lack of insurance coverage

No amount of planning, budgeting, or paperwork will fully protect contractors or lenders from all potential risks. However, several common insurance policies in construction can go a long way to mitigate the risk of loss to all parties. 

When a construction-to-permanent loan is used, the lender will often require the property owner or general contractor to purchase a builder’s risk insurance policy. This type of insurance protects against calamities like fire, wind damage, theft, and vandalism while the property is under construction. 

The post How a Construction-to-Permanent Loan Impacts Contractors & Lenders appeared first on Levelset.

We’ll take a look at some of these lesser-known building materials, how they’re used, and their pros and cons below. With some creativity from the designer, open-mindedness from the client, and approval from the building department, these alternative construction materials could open up a world of possibilities for your next project. 

Concrete alternatives

Concrete is the second-most widely used substance on the planet, surpassed only by water. It’s used for building residential foundations and driveways, but also for constructing hospitals, schools, and bridges. It’s also the material of choice for holding mother nature back in the forms of levees and dams.

While it’s a reliable and relatively affordable building material, concrete (and its production) is responsible for around 8% of global emissions. Project owners that would prefer to steer clear of concrete’s harmful impact can opt for one of the following materials.

Fly ash

Coal has its pros and cons, but one of the benefits of burning coal is that it produces fly ash. Fly ash is a fine powder formed by mineral impurities. When mixed with water and lime, fly ash becomes a material very similar to Portland cement, making it ideal for concrete blocks or bricks, as well as poured concrete. 

It’s recognized as environmentally friendly, requires less water than cement to mix, and costs less than Portland cement. However, its color consistency is hard to control, and it does take longer to cure.

Pros:

• Cost-effective over Portland cement
• Recognized as environmentally friendly
• Requires less water than cement

Cons:

• Longer to cure than concrete
• Color consistency is difficult to control

Ferrock

Ferrock is an environmentally-friendly cementitious product made up of up to 95% recycled materials. This concrete substitute consists of recycled steel dust, iron-rich ferrous rock, and silica from recycled glass. When mixed with water, it forms a compound up to 5 times stronger than concrete, more flexible, and more resistant to oxidation and corrosion. 

However, since it’s made from byproducts of niche industries, availability may be limited in some areas.

Pros:

• Made of recycled materials
• Stronger and more flexible than concrete
• Sets quickly and resists oxidation and corrosion

Cons:

• Limited material availability due to reliance on byproducts from other industries

Straw bales

As one of the old-school concrete alternatives, straw bale buildings have been around since the late 1800s. Made from the byproduct of wheat production, a machine compresses straw into dense bales, and the constructor uses them for walls.

Modern structures include post-and-beam frames with straw bales sandwiched between framing members. Once satisfactorily compressed during the construction process, the installer coats walls with a mud and clay mixture, finishing the bales to a smooth consistency. With proper care, straw bale construction buildings can last over 100 years — as long as they’re kept dry.

Pros:

• Environmentally-friendly material
• Walls have a high insulation value
• Creates thick walls that would otherwise be very expensive to create

Cons:

• Moisture and leaks can be devastating 

Rammed earth

Some form of rammed earth has been used in construction for thousands of years. In fact, one of the most popular rammed earth-built structures is The Great Wall of China. 

This construction material is made from layers of silt, clay, sand, and water poured into forms and then compressed with power rams. The result is a beautiful, durable material very similar to concrete at much less cost (as long as there are materials on site). 

Rammed walls offer excellent thermal mass, but they’re not great insulators. 

Pros:

• Very inexpensive (as long as there are materials on site)
• Creates a beautiful layered aesthetic
• High thermal mass, absorbing heat during the day and releasing it during the night

Cons:

• Surprisingly, rammed earth is not a great insulator

ByBlocks

ByBlocks are concrete block replacements made from 100% recycled plastic. They’re made by collecting recyclable and non-recyclable plastic, heating them, and then compressing them into cinder block-sized bricks. While they’re not easy for contractors or homeowners to get their hands on yet, they do propose an answer to the earth’s plastic problem, meaning they may become more popular in the future. While ByBlock walls do require threaded rod and compressive wood top and bottom plates, as mortar will not adhere, they’re very easy on drill bits and tools.

Pros:

• Practical use for recyclable and non-recyclable plastic
• Easier to drill through or fasten to than concrete block

Cons:

• Not compatible with mortar, requiring carefully placed threaded rods and locking bolts instead
• Not commercially available at the moment

Lumber alternatives

Lumber pricing volatility has created more headlines over the past few years than one could imagine. As a result, contractors, DIYers, and craftspeople have searched far and wide for materials they could use instead.

Steel framing

The commercial building industry has been using steel studs and tracks for years. It’s lightweight and unbelievably consistent in size and pass-through locations for wires and plumbing. 

The construction process goes quickly, and the material’s obvious fire resistance makes it a good replacement for traditional lumber (though metal studs can be more expensive). Heavier-gauge steel studs can even be used as exterior walls or in load-bearing applications.

Pros:

• Lightweight and consistent
• Quick installation
• Fire resistant

Cons:

• Can be more expensive than wood

Structural steel

Structural steel refers to the large metal beams that are often visible during the early stages of construction or in industrial-designed buildings. The long lengths of steel can withstand an incredible amount of weight over long spans, making them useful in creating open-concept homes or garages free from posts. 

Structural steel beams almost always require special ordering and they’re rarely light enough to install by hand — regardless of the size of the crew.

Pros:

• Carries lots of weight over long spans
• Can complement an industrial design

Cons:

• Requires custom ordering
• Heavy machinery required for installation 

Structural Insulated Panels (SIPs)

Structural Insulated Panels are modular wall sections made from foam sandwiched between two pieces of OSB. They’re incredibly strong and energy efficient, as the foam inside the OSB acts not only as the web to provide strength but also as insulation. In most cases, SIPs are more than sufficient for load-bearing walls, and since they generally arrive on-site ready for installation, there can be significant savings realized on labor. 

Pros:

• Arrives preassembled for fast installation
• Strong and energy efficient
• Reduces labor costs

Cons:

• Expensive as a materials purchase
• Still requires post and beam or timber framework to serve as the actual framework in most cases

Concrete

While concrete is clearly not solving any of the world’s eco-centric problems (and as noted above, can have supply issues of its own), it can be a useful alternative to framing lumber. Concrete materials like poured slabs or concrete blocks are strong, reliable, and long-lasting, resisting rot and corrosion for longer than most other materials. Yes, the production process creates a lot of harmful emissions, but concrete is, at times, cheaper than wood and lasts longer. 

Pros:

• Strong and durable
• Can be less expensive than wood

Cons:

• Produces lots of CO2 emissions

Engineered wood

Engineered wood, also known as SCL (structural composite lumber), is a type of wood product made from strands or veneers of wood products (typically byproducts from the lumber industry) and adhesives. Since each length of wood uses less tree material than a piece of traditional lumber the same size or of the same strength, engineered wood is considered more environmentally sustainable. 

These materials are much stronger than standard wood and they can be used for support beams, rafters, headers, joists, and columns. While they’re more expensive than traditional wood, when used as a carrying beam, they require less support over the same span, cutting back on the amount of materials necessary.

Pros:

• Stronger than traditional wood
• Uses lumber industry byproducts
• Can reach longer spans without structural support than traditional wood framing

Cons

• More expensive than standard wood framing lumber

Other wood alternatives

Until now, the wood alternatives mentioned were explicitly for replacing framing lumber. However, there are also alternatives to replacing wood trim, siding, and flooring materials. 

• Bamboo is a type of fast-growing grass. It’s harvestable in 3–5 years, which is considerably less time than trees. It’s useful for making flooring, trim, and other materials.
• Cork is another sustainable material. It comes from the bark of a cork oak tree.  Cork’s most popular use is as a flooring material, as it is durable, moisture-resistant, and comfortable underfoot.
• Fiber cement is a type of wood-replacement product made from sand, cement, and cellulose fibers. Originally a replacement for asbestos siding (which was originally a replacement for wood siding) its most popular use is cladding homes to protect them from the elements. These boards mimic the look of wood but they’re much more durable and last much longer. 

Get the latest building material costs and prices in common construction units like lumber 2x4s, cinderblocks, and more with Levelset’s Construction Materials Price Tracker.

Sheetrock alternatives

Sheetrock. Drywall. Gypsum board. Different names for the same material. But what other frame-covering alternative construction materials are out there for finishing interior walls?

Veneers

Folks who’d prefer a bit more texture or dimension for wall finishings may opt for a veneer. Made from materials like natural stone and brick, these finishes make the wall look like they’re completely solid masonry, but in reality, it’s just a layer an inch or two thick. Keep in mind that these layers do need something to adhere to such as a concrete surface, concrete board, or drywall stretched across studs, but they add more depth than a drywall surface can.

Pros:

• Creates a solid masonry wall look
• Provides a feeling of depth and texture

Cons:

• Does need a substrate to adhere to

Plaster and lath

While old-school as it may seem, there is still a place for plaster and lath walls. Today’s plaster walls feature metal mesh lath stretched across the framing, with coats of gypsum, sand or cement, and water laid over top. Plaster walls are more durable than drywall, insulate better, and are more fire resistant. Also, since there isn’t any organic material like the paper that faces drywall, plaster walls won’t harbor mold growth. With an expert hand, these walls will look as smooth and flat as drywall, but they’re expensive because they’re labor-intensive and require experience.

Pros:

• Improved durability, insulation, and fire resistance
• Won’t allow mold to grow

Cons:

• Expensive since it requires an expert’s touch

3D Panels

Another option for contractors or clients looking to add more depth or style to plain interior walls is 3D panels. These wall coverings come in sheets that feature raised patterns or textures. They can change the entire look of a wall quickly, and they come in a wide range of styles and patterns. They’re usually made from materials like polystyrene or medium-density fiber boards. In most cases, the panel is not enough to meet fire code, so a substrate like drywall, concrete, or concrete board is usually necessary underneath. 

Pros:

• Covers walls quickly
• Comes in a range of styles or patterns

Cons:

• They do require a substrate underneath to meet fire code requirements

Insulation alternatives

When most people think of insulation, they instinctively picture mounds of itchy pink fiberglass. While fiberglass insulation is the most popular type (and one of the most eco-friendly, since it consists of recycled glass), it can be a pain to work with, requires lots of protective gear, and must be kept free of moisture. Fortunately, contractors have a variety of alternatives to explore.

Mineral wool 

Mineral wool isn’t actually wool, but an insulation material made from extruded lava rock. The manufacturer spins the lava rock at high speeds, causing the rock to form thin strands that are then used to make a material very similar to fiberglass insulation. 

It’s an expensive material, but its moisture-resistant and fire-resistant properties exceed that of fiberglass. It’s also better at dampening sound transference.

Pros:

• Made from naturally occurring materials
• More resistant to moisture, fire, and sound than fiberglass

Cons: 

• More expensive than fiberglass

Spray foam

Spray foam insulation continues to grow in popularity. This polyurethane-based insulation adheres to the surfaces it touches when it’s wet and then expands, helping to fill voids and gaps for improved insulation. The foam is both a thermal barrier and a moisture barrier, allowing installers to get two steps out of the way with one application. 

Do note that while spray-in insulation is very good at insulating, many of the chemicals used and released during the curing process are harmful to the environment.

Pros:

• Expands to fill voids for high insulation value
• Acts as a thermal and moisture barrier
• Adheres to most surfaces when wet

Cons: 

• Chemicals released during curing can be harmful to the environment

Cellulose

Cellulose is an insulation material made from recycled paper products — mostly newspaper. The material is shredded into small pieces and treated with a chemical to improve its fire resistance. It comes in loose, crumbly form and is ideal for blown-in insulation in attics and walls. While it initially provides significant insulation, it can compress over time, reducing its insulation value and requiring topping off with more cellulose. 

Pros:

• Recycled product made from paper
• Ideal for blown-in insulation applications

Cons:

• Can settle over time and become less effective

Rigid foam

Rigid foam insulation is a popular alternative to fiberglass batts insulation. These sheets of insulation are often adhered to concrete surfaces, but they can also be cut to fit between rafters, joists, and studs in some situations. Rigid foam’s ability to insulate is dependent on its thickness, but it’s moisture-, rot-, and mold-resistant, making it a great choice for below-grade or moist situations. It is more expensive than fiberglass on a square-foot basis, however.

Pros:

• Easy to install
• Many applications
• Resistant to moisture, rot, and mold

Cons: 

• More expensive than fiberglass

Reflective insulation

Reflective insulation is similar to bubble wrap with a metallic coating on both sides. This type of insulation can reach an insulation value of R-17 when installed properly. Though slightly more expensive than fiberglass insulation, it is less prone to rodent infestation and water damage. 

Available in pliable wraps and in more rigid panels, reflective insulation works best in layers with an adequate air gap of about four inches between them. In addition, a thermal break between the reflective material and the framing helps prevent energy transfer. Installation does not require any special tools or equipment — HVAC tape is used to seal the seams. 

Pros: 

• Easy to install
• High R-value with proper installation
• No risk of fiber inhalation

Cons: 

• Slightly more expensive than fiberglass insulation
• Inadequate air gap or thermal break reduces effectiveness
• No noise dampening properties

Alternative building materials may keep your project on track

Material shortages can rear their ugly heads at any time. Any disruption in the supply chain will have ripple effects throughout the industry, so keeping options open (as well as your mind) may allow you to stay nimble and make informed game-time decisions.

While these alternative building materials aren’t likely to be anyone’s first choice for a long time, knowing they exist may be the difference when aiming to keep a project on track.

The post 17 Alternatives to Common Building Materials appeared first on Levelset.

With numerous policies available, the plumbing contractor’s insurance landscape offers many ways for you to protect your physical and financial business assets. Obtaining an insurance policy is a key step in planning for the success of your plumbing business, and we’ve developed a guide to help answer some of your questions. 

What is plumber’s insurance?

Plumbing contractor’s insurance may help your business stay afloat if accidents or injuries occur on the job. An insurance package for plumbers can involve many different types of policies that each apply to a specific aspect of your operations. 

A plumbing contractor’s insurance policy covers claims for property damage, but it may also help defend against lawsuits resulting from a work-related incident. Whether you are at fault or not in an accident, attorneys’ fees can take a big chunk out of your revenue. In this respect, general liability insurance or workers’ compensation could help cover those costs if an incident should occur. 

Each field of subcontracting work has its own area of focus in insurance matters. As a plumber, you may want to pay special attention to coverages that involve water damage and completed operations policies that protect you once a project is finished. 

Why plumbing contractors need insurance

Worker injury

Construction zones are busy areas where workers can get hurt. A plumbing contractor may suffer from injuries related to chemical or hazardous waste making contact with their skin, or working in confined spaces, such as sewers or manholes, that offer limited access to oxygen. Services like hospital stays and/or rehabilitation plans might rack up significant bills that could be difficult to pay without insurance. The average cost for a workers comp claim in 2019-20 was $41,353. If your business were found responsible for the injury, paying out of pocket for a worker’s medical bills could cause financial harm. 

Workers’ compensation insurance should be in place to help defray the costs of employee medical treatments. The coverage might also assist with programs designed to help workers recover and return to the job. 

Licensing & contract requirements

Any plumbing subcontractor in the field should carry a comprehensive insurance package in order to protect themselves and their business. Plumbing insurance may also help you secure work with general contractors who will likely require coverage per terms of a contract. And while laws differ in each state, having insurance coverage might also be required to obtain a contractor’s license or certification. 

Your customers may also want to know that you have insurance coverage in place. They can rest easier knowing there’s some protection in case you accidentally damage their property, or a third party slips and falls on the jobsite. 

Read More: First-Party vs. Third-Party Insurance: What’s the Difference?

Liability for damage

A plumbing contractor can greatly benefit from insurance because it can help protect their business from being sunk by potential large expenses from things like legal action plus jury awards. Even small disputes in the construction industry can have a negative impact on time and cash flow. Having an insurance strategy can be part of a prudent business plan. 

A plumbing contractor’s insurance policy may include one or both of these components: liability and property damage. 

A GL policy offers a wide range of protection. It can help pay for medical costs for an injured customer or help reimburse a GC if you cause a delay on a job. 

Property coverage applies to items you own that might be damaged during the course of a job, for example, if they are ruined in a fire, damaged by water, or vandalized. 

Becoming a master plumber is a step up professionally, but it comes with increased exposure to risk— so there are options for contractors to adjust coverage types and amounts accordingly.

What types of insurance can a plumbing contractor use? 

If you consider things that can go sour on a project, there may still be some liability gaps you need to be aware of. Here is a partial list of policies that may help protect your livelihood: 

Business owners policy: This policy is the foundation of a solid insurance plan. It packages liability and property damage coverages that form the backbone of your coverage portfolio. 

Commercial auto insurance: Motor vehicle accidents are one of the most common claims occurrences. Business auto policies protect your work vehicle and cover damages or injuries to a third party. 

Completed operations: A faulty joint in a water line can cause extensive damage to finished interiors. A completed operations policy gives you coverage for these situations even after the job is finished. 

Equipment floater insurance: With equipment floater insurance, your specialized tools and equipment will be covered regardless of where you travel on business. 

Materials floater insurance: This works like an equipment floater, but the coverage applies to pipes, sinks, toilets — whatever materials are meant to be installed on the job and stored offsite or onsite. 

Professional liability insurance: If your services include creating drawings or blueprints for plumbing configurations, professional liability insurance protects you if those designs are faulty. 

Workers’ compensation insurance: Workers’ compensation insurance helps provide income to and cover medical costs for employees who may suffer job-related injuries or illnesses. 

How do I get plumbing insurance?

Here are five steps to take to secure plumbing contractor’s insurance: 

1. Gather information about your business, including tax returns, annual sales volume, payroll information (if applicable), and claims history (if previously insured). 
2. Contact an insurance agent or broker who has experience with all aspects of plumbing contractor’s insurance.
3. Complete an application and submit to the insurance company as requested. 
4. Promptly answer any follow-up questions the insurance company may have. 
5. Make the required down payment to bind the insurance contract and get the policy issued. 

How much does plumbing insurance cost?

The cost of plumbing contractor’s insurance depends on a few variables:

• Location: Where you work will help determine how much you pay. For example, if you’re in a region that’s prone to coastal storms, factors like this typically increase cost. 
• Size: You may be a small shop, or employ many workers. The larger your business is, the higher your premium will be. 
• Experience: Newer plumbing contractors may pay more for workers’ compensation, unlike older companies that have a positive claims history with current and/or previous insurers. 

Premium rates for plumbers are often based on claims data and history for the overall industry. With fewer historical accidents and injuries, plumbing contractors may pay less for a business owner’s policy than other subcontractors who may encounter more incidents on a jobsite.

Making the insurance connection 

Plumber’s insurance makes excellent financial sense when you think about the things you can and can’t control on the job. Many business insurance carriers have familiarity with the plumbing business, and policies are usually affordable and easy to get as a result. 

The post A Plumbing Contractor’s Guide to Insurance Coverage appeared first on Levelset.

In this article, we’ll explain what contractors need to know about COIs, when they are needed, and how they work in construction.

Related: 9 Common Insurance Policies in Construction

Why a certificate of insurance matters

If you’re bidding on contract work, you will likely need a COI per terms of a legal agreement. Some parties — like owners and GCs — will want some assurances that any not-at-fault, job-related accidents or injuries will not cause them financial harm. So, providing a COI will help you meet contract requirements and put other parties’ minds at ease. 

There are a few parties that might require a COI from your contracting business. Aside from owners and GCs, a government entity may want to see proof of liability insurance. You may be seeking to work for a local, state, or federal government, and these bodies will want to know that you carry liability insurance before you’re awarded — or even considered — for a bid.

Many things can go off the rails during a construction project. A plumber could leave a line uncapped causing water damage, or a roofer could drop plywood on a worker below, causing injury. Since a GC or owner may not be found responsible for these accidents, they look to the specialty contractor’s general liability policy to help pay for damage or injuries. A COI provides evidence of in-force specialty contractor’s insurance. 

Read more: Does a GC’s insurance cover their specialty contractors?

COIs can be used for circumstances other than those meant to show proof of insurance. 

1. While a COI shows evidence of insurance, it may be used to include language that reflects an additional insured (AI) endorsement, or the addition of another party (owner, investor, GC) to your specialty contractor’s policy.  

2. A COI may include a waiver of subrogation endorsement that basically asks your insurance company to pay an insurance claim, while giving up the ability to recover (or subrogate) damages from the party that actually caused the problem. 
3. Most COIs give information on general liability insurance, but can also be used to show proof of commercial automobile or workers compensation coverage. 

When do I need to provide a COI? 

Project owners and GCs have their reasons for wanting COIs, and they are not the only parties that may request this proof. 

• If you rent storage or office space from a building owner, they may ask for a COI before you sign a lease. If you should cause damage to the property, chances are good that they’ll first look to your insurance policy for protection. 

• A supplier provides you with tools and building supplies. This party may want a COI to ensure they are protected from liability in the event of a product-related injury or accident. 

• You may secure funding for equipment through a bank or other lender. To protect their interests, these institutions will require property insurance on a backhoe, for instance, if it’s financed through their operation. 

What information is included in a COI?

A standard-form COI that presents proof of liability insurance will include this information: 

• The name and address of the insured party 
• The insurance agent’s or broker’s contact information 
• The name of the insurer(s) providing coverage 
• The type of coverage 
• The amount of coverage 
• A policy number
• The policy’s expiration date 
• A description of coverage 
• The name and contact info of the COI requestor 

It’s important to review each COI, ensuring that all of the above information is included and displayed on the appropriate form. 

Why contractors should keep a record of all COIs

Even though a COI may expire, tracking those certificates still holds value. There may be incidents that require you to document your insurance status while you perform certain jobs. 

An insurance claim can be filed many years into the future for an incident that occurred many years in the past. So, a COI can provide proof of coverage at that previous point in time. 

Staying organized is an additional benefit to tracking COIs. You may need to maintain insurance records for audit purposes, or to help draw a line between employee and independent contractor statuses. A system for tracking COIs will also help save time and money by having important insurance documents readily available in one central location. 

How long should I keep my COI?

There’s no set rule on keeping a COI. But, it’s prudent to store the documentation as long as your business is in existence — and then some. As mentioned, insurance claims can occur many years in the future, and having a COI to exhibit proof of insurance is one more layer of protection for your company. 

When should I ask for a COI?

If you’re a GC and hire specialty contractors to perform work, you need to ask each of these parties for a COI. This is because the nature of the specialty contractor relationship adds additional risk to the equation. You could be held liable for injury or damage caused by a specialty contractor if they are not insured. 

Specialty contractors and GCs must both ask vendors for COIs. There’s always a chance that a defective tool or faulty product supplied by a vendor could result in an accident on the job. As with uninsured specialty contractors, the legal system is such that a harmed party may seek damages from you if that supplier operates without insurance. 

What’s the difference between a COI and an insurance policy?

A COI is used to show another party that you have contractor’s insurance in place. A COI can also be used to show a GC or owner that you’ve named them by endorsement as an additional insured on your contractor’s liability insurance. In these respects, a COI is a summary of important information included in an insurance policy— and therein lies the difference. 

The actual insurance policy issued by the career is a much lengthier and more detailed document. It is a contract between your business and the insurance company. The policy contains all the pertinent information needed when you might have questions about what perils are covered or what you must do if a potential claim takes shape. 

A COI is a very common document in the construction insurance world. It is an official summary of coverage issued by a representative of an insurance company. A project owner might request a COI to have proof that your insurance coverage meets the requirement of a contract, for example. Since insurance claims can be made retroactively, it’s wise to retain COIs as long as your business operates. 

The post What Is a Certificate of Insurance (COI) for Contractors — and When Do You Need One? appeared first on Levelset.

What is carpenter insurance?

Carpenter’s insurance is a financial instrument that helps protect your business if accidents, injuries, or illnesses occur in a work-related capacity. For protection from financial consequences that could be small or large, you pay a premium to an insurance company for policies that cover many unexpected situations. 

There are many policies that apply to a carpenter, but a simple business owner’s policy can include property damage and liability coverage. If you break a window in a customer’s home, property damage coverage helps pay the cost of repair. If a third party gets injured on a job, liability coverage helps pay the cost of legal defense if you get sued for the accident. 

Does a carpenter need insurance?

Carpentry is a diverse occupation. During daily operations, any number of accidents could happen on a project. A large claim against your business could have a devastating financial effect that could threaten your livelihood. Having carpenter’s insurance is an affordable way to protect against these potential issues. 

To illustrate the need for insurance, you (or an employee) could be nailing a stud in place on the second floor of a new home. The board slips from your grip and strikes the employee of another sub walking below. Injuries are minor but the person needs medical treatment, and your carpenter’s liability insurance will help cover the costs of those medical services. 

Insurance serves another purpose. Without an adequate subcontractor insurance plan, you may not be able to land work with a general contractor (GC) or owner. The parties who hire you will want to know that you, and they, are protected in case something goes awry on the job. 

What insurance does a carpentry contractor need?   

A carpenter’s business owner policy is a good foundation, but you’ll want to explore other policy options that may apply to your business. Here’s a partial list: 

Commercial auto insurance: You may operate trucks or vans, and commercial auto coverage enters the mix if you get in an accident with another vehicle or damage a fence on a job.

Inland marine insurance: This coverage protects tools, equipment, or building materials while they are stored on the job, at your business location, or anywhere in transit. 

General liability insurance: General liability insurance protects contractors in situations where someone claims the contractor’s work led to bodily injury or property damage. An owner or GC may want you to have this in case you cause an accident or injury on a project. And while it’s not a legal requirement in most cases, in some states it may be required to get licensed.

Professional liability insurance: You may need this coverage if you perform design or consulting services that involve the sale of drawings or blueprints. 

Surety bonds: Surety bonds pay out to an owner or GC if you are not able to perform your work per the terms of a construction contract. 

Workers’ compensation insurance: If you have employees, a workers’ compensation policy helps them replace lost income and pay for medical treatment if they are injured or fall ill due to job-related conditions. 

Cyber liability insurance: This helps cover the cost of recovery or restoration of electronic records if computers or mobile devices are hacked or destroyed. 

How do I get carpenter’s insurance?

In most cases, the insurance application process requires basic information about your business. You should be prepared to provide information that includes payroll data, annual revenue figures, and a history of prior insurance claims, if any. 

To obtain carpenter’s insurance, you’ll need to contact an agent or broker. You can begin the application process in person at the agent’s office or online applications are also another possibility.

After you give the agent or broker all the necessary information, the application is reviewed by an underwriter. If approved for the policy, you’ll need to remit a down payment to bind the contract, and then you’ll be covered as of the effective date. 

How much does carpenter’s insurance cost?

The cost of carpenter’s insurance varies based on many factors. Some of these factors include: 

The amount of coverage: To meet the terms of a contract,  GCs or owners usually want to see a general liability amount of $2 million. If you choose more coverage, the cost of the general liability coverage will increase. This rule also applies to coverage for business property and vehicles. 

Annual revenue: The more work you do, the more money you can expect to pay for carpenter’s insurance. If you have a large operation that takes in $2 million annually, premiums will be higher for you than a company whose revenue is $500,000. 

Your geographic location: If you perform work in an area that experiences weather events like hurricanes or flooding, the strong probability that you’ll incur a claim is factored into your premium. Insurance companies look at historical statistics to determine how likely your business is to incur a claim. 

Insurance expenses for carpenters will also depend on the type of work you do. Carpenters should clearly define their scope of operations. If you have a shop where you’re making custom woodwork, that pursuit classifies differently from a framer — or a carpenter who does both. 

A carpenter can perform a lot of different functions so they need to include all duties in their work description. This helps the insurance carrier to rate the policy properly and ensure coverage applies if a claim does occur.

What other insurance policies can be bundled with subcontractor insurance?

The most commonly “bundled” carpenter’s policy is the business owner’s plan. It includes general liability insurance and business property damage coverages. Often, you can amend this core package to include higher coverage amounts for high-value equipment or endorsements like basic cyber insurance. Commercial auto and workers comp policies must stand on their own, however. 

Purchasing carpenter’s insurance does not have to be a complicated endeavor, and the protection you gain will give you and other parties some measure of security. Getting work will also be easier when you can provide valid proof of insurance to an owner or GC. 

Nail down your insurance coverage

Carpenter’s insurance can help create a solid financial foundation for your business. If accidents or injuries occur on the job, these policies protect you from associated costs that could cut deeply into your bottom line. There are various policies that address different parts of your operation, and it’s easy to start and maintain a comprehensive insurance plan through any agent or broker.

The post Carpenter’s Insurance: Who Needs It & Why appeared first on Levelset.

Our list of the best construction podcasts of 2023 will help you find shows to help you grow your knowledge, career, and business. Use the table of contents to find shows about the specific construction topic you’re interested in.

Construction career podcasts

1. Laying Foundations 

Starting a career in construction is a lot like a construction project. Hosts Davis Hambrick and Walker Lott talk their listeners through career paths, growth, and strategies in episodes of Laying Foundations. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30 minutes 

Release schedule: Weekly

2. The Construction Leadership Podcast

Growing and building a successful construction business requires a deep commitment to leadership. Author and podcaster Bradley Hartmann distills complex leadership topics and interviews industry leaders to share hard-won wisdom about guiding a construction company toward success.

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 45 minutes 

Release schedule: Weekly

3. The Construction Life

Two guys living the construction life, Manny Neves and Carlito Pavlovic, discuss the wake, work, sleep, and repeat of construction. They interview other pros in the construction industry, talk about trends, and discuss construction techniques in long-form episodes that get to the heart of construction. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 90+ minutes 

Release schedule: Weekly

4. Construction Brothers

Eddie and Tyler Campbell are brothers who started working with their dad in the construction industry during their teenage years. Their podcast, Construction Brothers, provides listeners insight into business strategy and industry trends — along with thoughtful commentary on key changes the industry needs to undergo. 

Where to listen: Apple Podcasts | Spotify 

Episode length: 15+ minutes 

Release schedule: Weekly

5. Elevate Construction

Hosted by Jason Schroeder, Elevate Construction aims to do exactly what its name suggests: Build up the industry to a higher standard through interviews and training. Aimed at anyone in the construction industry, this podcast has big ideas for workers and companies looking to better serve their customers. 

Where to listen: Apple Podcasts

Episode runtime: 30 minutes

Release schedule: Every weekday

Construction business owner podcasts

6. Construction Leading Edge Podcast

Billed as the best podcast for contractors who want to become leaders and entrepreneurs, The Construction Leading Edge Podcast is hosted by Todd Dawalt. With high-quality interviews and solid tips, the podcast works to help construction business owners grow and succeed. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30+ minutes 

Release schedule: 3x/month

7. People First, Then Construction

The mantra behind People First, Then Construction is simple: Don’t be a jerk. The host Jonathan Cinelli uses his decades of experience training teams and leading projects to communicate the important truths that can help a construction leader understand that how it’s been doesn’t have to be the same as how it could be.

Where to listen: Apple Podcasts | Spotify 

Episode runtime: Anywhere between 5 minutes–1 hour

Release schedule: Weekly

8. Disaster Podcaster

Klark Brown is a well-known restoration contractor who shares tips about how to get into — and succeed — in the complex world of restoration work. With interviews, anecdotes, and trends, The Disaster Podcaster is considered the go-to source for restoration contractors. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 1 hour 

Release schedule: Weekly

9. Construction Genius

If you want to be a genius, you have to work hard. That’s the guiding spirit behind Construction Genius, hosted by Eric Anderton. In each episode, he presents practical tips for leadership, planning, and business development. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 20+ minutes

Release schedule: Weekly

10. Profit Tool Belt

Contractors who want to learn more about how to market themselves, build their customer base, and get paid should turn no further than Profit Tool Belt. With host Dominic Rubino and guests, listeners of the show learn about how to build a solid contracting business. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 20+ minutes

Release schedule: Weekly

11. Kid Contractor

Caleb Auman is “The Kid” of Kid Contractor, and he has a lot to say after more than 20 years in the construction industry. After growing a business along with his wife, Caleb podcasts several times a week to share wisdom with current and future construction business owners.

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 35+ minutes

Release schedule: 4x/week

12. The Art of Construction

The Art of Construction is focused on innovation and creativity in the construction industry. The host, Devon Tilly, brings together experts from across the industry to share thoughts on entrepreneurship in the world of construction. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 45+ minutes

Release schedule: Weekly

13. The Contracting Handbook

Hosted by Mike Knoche, The Contracting Handbook is useful for general contractors and subcontractors alike. By sharing true stories from people in the construction world, the podcast provides valuable information about building a better construction company. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 60+ minutes

Release schedule: Weekly

14. Contractor Cents

Ruth King wants to show contracting businesses how to increase productivity and profit with short, information-packed episodes. In Contractor Cents, listeners can learn about finance, culture, sales, and more with the goal of building stronger construction businesses. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 8–30 minutes

Release schedule: Weekly

Construction safety podcasts

15. The Safety Guru

Eric Michrowski is a world-renowned safety guru, and his podcast focuses on what he knows best: putting wellbeing and safety first. His mission is to show that safety is an investment in people, not a cost on a budget. Each episode focuses on strategies to maintain a safe workplace in the construction industry.

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30–45 minutes

Release schedule: 2x/month

16. On the Safe Side

Produced by Safety+Health Magazine, On the Safe Side is a monthly podcast that explores the most important safety issues affecting the workplace. With a goal to reduce preventable injuries and deaths, this podcast talks with experts to educate business leaders about OSHA guidelines and best practices in safety. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 20–45 minutes

Release schedule: Monthly

17. OH&S SafetyPod

Hosted by Occupational Health and Safety’s editor Sydny Shepard, OH&S SafetyPod talks with industry experts about a variety of health and safety topics that affect millions of people working in construction. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 10–20 minutes

Release schedule: 2x/week

18. CPWR Construction Safety and Health

A project of the Center for Construction Research and Training, CPWR Construction Safety and Health covers the safety climate across the construction industry. The podcast pushes for a return to basic principles when it comes to prioritizing safety, and it uses a data-driven approach to protecting workers. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 10–45 minutes

Release schedule: Monthly

Construction law podcasts

19. The Lien Zone

Alex Barthet is a board certified construction lawyer and a mechanical engineer, making him an excellent fit to host The Lien Zone, which covers technical and legal questions related to construction law. With his deep knowledge and great personality, he gets listeners the information they need to know and helps them enjoy the journey along the way. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 10–50 minutes

Release schedule: Weekly

20. Construction Law Today

The world of construction law can seem daunting and ever-changing, but the Construction Law Today podcast from the American Bar Association helps to keep construction professionals at the top of their game. With discussions about every facet of construction law, this podcast is an infrequent but welcomed primer on difficult topics made simple. 

Where to listen: Apple Podcasts

Episode runtime: 30 minutes

Release schedule: 6x/year

21. The Construction Briefing

Construction law isn’t just statutes and codes — it’s about situations that arise in the complex world of construction. The Construction Briefing, produced by Thomson Reuters and hosted by Michelle Rousell and Yassir Mahmood of Practical Law Construction, helps to show how complicated laws play a role in everyday construction. From building safety to payments and adjudication to collateral, this podcast lays out what listeners want to know about construction law. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 1 hour

Release schedule: Monthly

22. Law and Mortar

Trent Cotney and John Kenney are the hosts of Law and Mortar, the hilariously named but endlessly educational construction law podcasts. They cover everything to do with the legal issues that affect construction safety, profitability, and business. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 15 minutes

Release schedule: 2x/month

Construction trades podcasts

23. Power to the Trades

Hosted by various members of the eSub team, Power to the Trades discusses how trade contractors can up their game with new technology. With a different focus every month, as well as real-life stories from contractors, this podcast presents practical advice for doing better work with better tech. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30 minutes

Release schedule: Monthly

24. Talkin’ Trades

Along with hosts Randy Beall of Georgia Construction Careers and Rut Walker from Union Up, listeners of Talkin’ Trades get an inside look at how to grow a career as a trade contractor. They interview guests and talk about safety, performance, and many more issues affecting trade contractors day to day and over the course of their careers. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 15–60 minutes

Release schedule: 6x/year

25. Skilled & Sober

The host and creator of Skilled & Sober, Garrett Davis, is passionate about bringing awareness to the issue of drug and alcohol addiction in the construction industry. With a focus on healing and recovery, each episode shares a guest’s personal story about addiction — and how much it takes to overcome. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 90 minutes

Release schedule: 6x/year

Construction technology podcasts

26. Construction Revolution

The Construction Revolution podcast places its focus squarely on the technology that’s revolutionizing the construction industry. From software to hardware — and even amazing innovations like robotics — the podcast covers developing trends in construction tech.

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30 minutes

Release schedule: 6x/year

27. Data in Construction

Construction may seem like a mainly physical task at first, but behind the scenes, there are thousands of pieces of data: materials, designs, change orders, labor hours, budgets, and more. Data in Construction, hosted by Hugh Seaton, takes a deep look into how to manage all of that data for a more effective job site. 

Where to listen: Apple Podcasts

Episode runtime: 30 minutes

Release schedule: 2x month

28. The Construction Dorkcast

Nerds may not be the first thing you think of when it comes to construction, but a group of passionate technology nerds calls themselves The Construction Dorkcast, looking for ways that technology can move the industry forward. With monthly episodes covering every aspect of technology, this group of nerds has big ideas for reshaping construction.  

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 1 hour

Release schedule: 2x month

29. The ConTechCrew

The crew at ConTechCrew has a guiding motto: The future is built. Nearly everything we interact with every day is built with, and innovations that make building easier, cheaper, and better will change all of our lives. Host James Benham covers hardware, software, devices, apps, and more in this highly rated construction technology podcast. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 1 hour

Release schedule: Weekly

30. Construction Disruption

Construction is a $1.5 trillion industry that’s ready for a huge explosion in technological innovation. Construction Disruption has the inside scoop on the ever-evolving technologies and trends that are pushing construction toward a new horizon. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30 minutes–1 hour

Release schedule: Weekly

31. Future Construct

Host Amy Peck takes listeners of Future Construct into imagined futures where augmented reality and other emerging technologies are the norms for the construction industry. With expert guests and a rotating focus on dozens of upcoming technologies, this show is an excellent starting point for anyone looking to see how technology could reshape construction in the coming years. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30–90 minutes

Release schedule: 2x month

32. Automate Construction Podcast

Automation is changing nearly every industry, and construction is no exception. The Automate Construction Podcast gives a closer look to listeners interested in how 3D printed construction, parametric design, and other AI-driven technologies are weaving their way into the construction industry. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30–90 minutes

Release schedule: Weekly

33. The Construction Engineering Show

Host Bob Hildebranski is a licensed professional civil engineer who has been working in the construction industry for more than 30 years — more than long enough to see how it’s changed and is continuing to change. Episodes focus on the underlying techniques that engineers use to build safe and practical buildings every day. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30 minutes

Release schedule: Occasionally

Construction trends podcasts

34. Digital Builder

Produced by industry leader Autodesk, the Digital Builder podcast takes a monthly look at the trends on the forefront of construction. With focuses on legal changes, training, technology, strategy, and more, episodes take listeners on a journey to a better understanding of what’s new in construction. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 45 minutes

Release schedule: Monthly 

35. Constructed Futures

The Constructed Futures podcast, hosted by Hugh Seaton, is a weekly dive into trends in construction finance, technology, and productivity. Featuring guest interviews, each episode looks closely at industry trends that are affecting every facet of the building process, from financing through building. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30 minutes

Release schedule: Weekly

36. The Construction Corner Podcast

Dillon Mitchell and Matt Vetter interview guests from the construction industry in their Construction Corner podcast. They’ve covered entrepreneurship, trades, technology, and more in their podcast — even putting out episodes encouraging young people to enter the industry. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30 minutes – 1 hour 

Release schedule: Weekly

37. Mass Construction Show

Joe Kelly is the host of Mass Construction Show, which covers many aspects of construction, including risk management, real estate, and technology. While he does occasionally focus on Massachusetts in particular, the content is typically aimed at anyone interested in the construction industry at large.

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 5 minutes–2+ hours 

Release schedule: Weekly

38. Mass Timber Construction

The trend of mass timber construction is sweeping the globe, and host Paul Kremer reports twice a month with updates. As an alternative to steel and concrete construction, mass timber has a number of advantages, which each episode lays out along with up-to-date information about prices, techniques, and more. 

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 10 minutes

Release schedule: Weekly

39. The Connected Construction Show

The Connected Construction Show looks at emerging trends and technologies like BIM and blockchain through the eyes of host Matt Sprague and his many industry guests. Listeners who check in for each new episode are greeted by updates on the major trends shaping the construction industry.

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 30 minutes

Release schedule: Weekly

40. Bridging the Gap

Sustainability, marketing, modular construction, lean construction, and more are covered in Bridging the Gap, which has the goal of taking abstract concepts and bringing them to real-world construction projects. Host Todd Weyandt has made it his mission to share practical tips to bridge the gap between theory and practice for construction professionals.  

Where to listen: Apple Podcasts | Spotify 

Episode runtime: 45 minutes

Release schedule: Weekly

41. disJointed

Construction has many stakeholders across many phases of a project—and each of them may have different objectives, tools, criteria, communication methods, and more. That leads to a situation that can feel disJointed, the name of an excellent construction podcast that’s trying to connect everyone in construction with shared goals and principles.

Where to listen: Apple Podcasts

Episode runtime: 30 minutes

Release schedule: 2x month

The post 41 Best Construction Podcasts in 2023 appeared first on Levelset.

But what if the general contractor isn’t at fault, and a subcontractor is to blame? Does a general contractor’s insurance cover their subcontractors’ accidents or mistakes? While there isn’t a cut-and-dry answer to these questions, we’ll take a deeper look into insurance coverage and what happens in these situations.

Who is covered by an insurance policy?

At their core, insurance policies are agreements between two parties: the insurer and the policyholder. 

The policyholder is the primary beneficiary of the policy. What this means is that financial losses caused by accidents, mistakes, and other issues that are the fault of the general contractor will be covered under the policy. This is the case when the losses impact only the contractor or sub holding the policy, or when a mistake affects a third party. 

If a sub accidentally drops a steel beam on the project manager’s new sports car, that subcontractor’s liability insurance policy would likely cover the damage. The car owner can’t go after a different contractor’s insurer for the damage.

GC insurance & subcontractor coverage 

Most general contractors and subcontractors are required to carry an insurance policy in order to to obtain a contractor license. However, the types of policies and their limits (the maximum amount claims can pay out) are limited.

However, with the amount of risk involved in a standard construction project, general contractors typically need to hold multiple policies. General liability, builder’s risk, and subcontractor default insurance are among the most common, and wrap insurance is growing in popularity.

Let’s take a look at each of these policy types — and whether or not a GC’s insurance will cover their subcontractors.

General liability insurance

Verdict: A contractor’s general liability insurance typically does not cover subcontractor damage. 

A general liability insurance policy protects the policyholder from claims of property damage or bodily injury caused by the contractor or its employees. This policy may also cover legal fees involved in certain types of lawsuits. The contractor (policyholder), the property owner, or a third party unrelated to the problem may file a claim against the policy.

For example, if a plumbing contractor accidentally damages the foundation of the building they’re working on, their general liability insurance policy will likely cover it. Or, if that same contractor damaged the neighboring structure while in the course of their work, they could submit a claim through their general liability policy. 

General liability is the most common type of insurance carried by construction companies. It affords the contractor some stability against financial stress, helping them continue to provide quality service. It also gives the property owner a safety net against mistakes or accidents caused by the contractor.

A general contractor may add a subcontractor as an additional insured entity under their policy, but this isn’t very common.

Builder’s risk insurance

Verdict: Builder’s risk insurance may cover subcontractor damage in some situations. 

When a contractor or project owner wants to protect the structure against risk, they can purchase a builder’s risk insurance policy. Builder’s risk insurance protects the building while it’s under construction or renovation, allowing the policyholder to recoup losses caused by accidents, fires, weather, vandalism, theft, or other risks named in the policy. Clearly, the work of the subcontractor will be covered, though damaged or stolen equipment may be on a case-by-case basis. 

There are certain damages that a builder’s risk insurance policy won’t cover. Events like damage to tools and equipment, faulty building design, or defective materials typically aren’t covered in a builder’s risk policy. For this reason, it’s an add-on policy that many contractors carry in addition to their general liability insurance.

Subcontractor default insurance

Verdict: SDI covers the policyholders against subcontractor failures.

Subcontractors don’t always do what they’re supposed to do, and the financial implications can be significant. Contractors can protect themselves from these risks by purchasing subcontractor default insurance. 

Subcontractor default insurance protects policyholders against the financial losses caused by a default of performance of a subcontractor. For example, if a sub-sub fails to complete their obligation and causes schedule overruns, necessitates hiring a new sub, or causes another ripple effect, the policy will cover the costs associated with the failure. These policies can serve as alternatives to performance bonds, or as a supplement to a surety bond. 

Wrap policies (OCIP/CCIP)

Verdict: Wrap policies typically provide general liability insurance to everyone on the project, including subcontractors.

In situations where the project owner or general contractor prefers not to worry about the potential of uninsured subs, they may purchase a wrap policy, known as a controlled insurance program (CIP).

A CIP provides everyone on the project with general liability insurance, allowing some subcontractors to forgo carrying their own policy. In some cases, a wrap policy may even include worker’s compensation coverage.

There are two forms of wrap policy: OCIP and CCIP. An OCIP stands for Owner Controlled Insurance Policy, while CCIP stands for Contractor Controlled Insurance Policy. They are essentially the same policies and offer the same coverage — the main difference being who purchases the policy.

There are several reasons contractors and owners purchase a wrap policy for a project. First, it helps ensure that any accidents or mistakes are handled smoothly. Since one insurer provides coverage, multiple companies won’t be fighting over responsibility for payment. Also, a wrap policy may allow a project owner or general contractor to avoid penalties for hiring uninsured subcontractors.

Bonds and subcontractor coverage

While insurance protects the policyholder from loss due to accidents and mistakes, a bond is quite different. A construction bond is a three-party agreement between the principal (i.e. the contractor), the surety, and the obligee (i.e. the person hiring the contractor). 

The bond is purchased by the contractor and protects the property owner from financial risk. A GC’s performance bond protects the owner from non-performance of the prime contract. A payment bond protects the owner’s property from mechanics lien claims in case a subcontractor or other party doesn’t receive payment. 

A contractor’s bond typically does not cover the actions of subcontractors unless they are specifically named on the bond. In practice, if a subcontractor defaults on a critical path task, it could cause the GC to default on their prime contract and lead to a claim on the bond.

How to ensure subcontractors are covered

The effects of accidental damages and injuries can sidetrack a project or result in financial doom. For those reasons, general contractors and project owners need to ensure they are protected against subcontractor mistakes or damage. 

Luckily, ensuring subs have coverage isn’t necessarily challenging. Project owners can require the general contractor to purchase a subcontractor default insurance policy, while also providing proof of their own coverage. Or, general contractors can require subcontractors to provide proof of their insurance policy, and the general contractor can keep track of subcontractor policies along with other compliance documents.

If an owner or GC wants to use a bond to protect against subcontractor default, they can name them on the GC’s bond, or require them to purchase a subcontractor performance bond. 

However, one of the most surefire ways to ensure that everyone on the project has insurance coverage is to purchase an OCIP or CCIP wrap policy. These policies cover everyone on the project, allowing for a collaborative approach to insurance for better protection.

The post Does GC Insurance Cover Subcontractors? appeared first on Levelset.