If you are a builder, contractor, sub-contractor, developer, owner or project manager planning a construction project it can be an exciting time as you prepare for your vision to become reality. There is a great deal of uncertainty in construction; however, and these projects often depend on multiple parties to fulfill their contractual obligations. That is why we regularly assist clients with insurance policies covering builder’s risk, wrap-up liability, commercial general liability and bonding, including bid bonds, performance bonds and labour and material bonds. We also provide commercial vehicle insurance to businesses across Edmonton.
Selecting the Coverage that Works for Your Business
Each business is unique and we work with all parties, including builders, contractors, developers, sub-contractors, project managers and owners to find the right insurance protection for your project.
While each project is unique, there are some common types of commercial insurance policies that will protect you from the risks of construction projects in Edmonton and surrounding areas.
1. Builder’s Risk Insurance
Builder’s risk insurance is also known as course of construction insurance, as it typically provides coverage during the construction period. This insurance is designed to insure projects or buildings against replacement or repair costs while they are under construction and in some cases for a specified period post-construction.
These policies generally cover all property on the construction site including temporary property, such as scaffolding and building materials. The policy covers accidents on the project site that causes damage to the building.
2. Wrap-up Liability
Wrap-up liability insurance policies are a critical component of any major construction project, especially large construction projects. They can be tailored to a particular project, providing third party liability insurance protection for all participants or contractors working on the project.
The policies are usually designed to cover all of the team members involved in the project, such as the owner, developer, general contractor, sub-contractors, project manager and sometimes others, such as consulting engineers or architects. Typically supply or security firms would be excluded from coverage under the policy.
Insurance coverage is provided for most building types: fire resistive, non-combustible, masonry, frame construction and civil works projects, involving the construction of bridges, dams, sewers and watermains, etc. These policies are usually in place during the construction period and afterwards during the warranty period.
3. Commercial General Liability (CGL) Insurance
CGL insurance is not specific to just the construction industry, but is a common form of commercial insurance in Edmonton that protects the business against unexpected risks. With CGL insurance, your business can be protected with an annual policy or multi-year policy (for single projects) from a range of potential common claims, such as bodily injury, property damage or personal injury to third parties that occur on the site.
In the context of construction projects, commercial general liability insurance protects the owners, contractors, suppliers and others from liability resulting from accidents at the construction site that injure individuals or their property.
There are a number of different bonds used in the construction process. Surety bonds are a three-party contract by which the insurer assures the project owner that the contractor will perform a contract by finishing the agreed upon work to a specific standard. If the contractor fails to meet this obligation, the surety company is required to see the project is completed. Surety bonds can take three forms: bid bond, performance bond, and a labour and material payment bond.
A bid bond provides financial assurance that the bid for a project is made in good faith and that the bidder intends to honour the bid price if the bidder is successful. The bid bond also provides assurance to the project owner that the bidder agrees to provide any other required bonds (e.g. performance bonds or labour and materials bonds) as stipulated should he or she be successful in obtaining the bid.
Performance bonds protect the project owner from financial losses if a contractor performs inadequately under the contractual terms. These bonds are issued at a percentage of the price of the contract, such as 50 percent or 100 percent of the contract price.
Finally, a labour and material payment bond protects suppliers or subcontractors against forfeiture of payment from the general contractor. These types of contracts are also based on a percentage of the unfulfilled contract’s value and issued up to 100 percent of the contract value.
5. Commercial Vehicle Insurance
Many parties in a construction project will rely on commercial vehicles during the course of the project. There are different types of commercial vehicle insurance policies in Edmonton available depending on the needs of your business. In the construction industry, commercial vehicles are often used to transport goods to and from sites under one fleet policy.
Contact MBS Insurance Brokers Ltd. In Edmonton For More Information
At MBS Insurance Brokers Ltd., we have been helping businesses for over 45 years and are a leading full-service brokerage in Alberta, providing bonding and commercial insurance in Edmonton and throughout Western Canada. If you are planning a construction project and have questions about what type of insurance will best protect you, contact a trusted commercial insurance broker in Edmonton today for more information at 780-436-7880. We can provide a quote based on your specific business needs.