Demolition Contractors Insurance Policy Information
Demolition Contractors Insurance. Demolition contractors are in the business of tearing down roofs and walls. This type of work involves heavy machinery and falling objects, which could put them, their employees, and anyone they work with or who is near the jobsite, at risk of serious injuries.
Like any other business, there are also a number of other liabilities that demolition contractors could face.
Demolition contractors (or wrecking) dismantle buildings, structures, machinery, or equipment. Techniques employed vary according to local codes, the type of building or structure being demolished, and the exposure to adjacent properties.
Limited demolition work used for remodeling projects may be done with only hand tools (called "tear-out"). On a larger scale, work may be done with a wrecking ball swung from a crane or with explosives, including implosion that generates gravitational collapse of a building.
Rough sorting of material may take place, particularly if the insured engages in salvage operations on the equipment, machinery, or building materials.
One major concern is the exposure to and the removal or containment of asbestos and lead from older buildings, requiring the wrecking operation to be carefully done in compliance with environmental standards for removal and disposal.
If you are a demolition contractor, it's important to safeguard yourself from the perils that could arise. In addition to following safety protocols and offering training courses, carrying the right type of demolition contractors insurance coverage is an absolute must.
Demolition contractors insurance protects your business from lawsuits with rates as low as $67/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked demolition contractors insurance questions:
- What Is Demolition Contractors Insurance?
- How Much Does Demolition Contractors Insurance Cost?
- Why Do Demolition Contractors Need Insurance?
- What Type Of Insurance Do Wrecking Contractors Need?
- What Does Demolition Contractors Insurance Cover & Pay For?
What Is Demolition Contractors Insurance?
Demolition contractors insurance is a type of liability insurance that provides coverage for damages and injuries that may occur during the demolition process.
It protects the demolition contractor from financial losses and legal fees associated with accidents and incidents that may occur on the job site. The insurance may cover damages to the property being demolished, third-party injury, and other damages incurred during the demolition process.
This type of insurance is typically required for demolition contractors as part of their job contract or as a requirement by local building codes.
How Much Does Demolition Contractors Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small demolition contractors ranges from $67 to $109 per month based on location, size, payroll, sales and experience.
Why Do Demolition Contractors Need Insurance?
There are a number of incidents that can arise on the jobsite. A third-party or an employee could become seriously injured. A mistake can be made during a demolition project. Your equipment could become damaged.
These are just some examples of the type of incidents that could occur, and serious financial repercussions could be associated with all of them.
You could be held liable for injuries and be required to pay for medical care, or you might be facing a lawsuit, for example.
Depending on the severity of the situation, the liabilities that are associated with your business could end up putting you in a serious financial situation. To avoid having to pay for costs out of your own pocket and potentially going bankrupt or going out of business completely, it's absolutely essential for you to have the right demolition contractors insurance coverage.
With the right policy, you can protect yourself from financial perils.
What Type Of Insurance Do Wrecking Contractors Need?
What type of demolition contractors insurance policies should wrecking contractors carry? Below, we highlight some of the most critical types of coverages you should have:
- Commercial General Liability: This type of insurance offers protection from third-party injuries and property damages. For instance, if a vendor makes a delivery to the jobsite and is hit by a falling object, commercial general liability insurance will help to cover the cost of any necessary medical care, as well as any legal fees that you could end up facing.
- Professional Liability: Even though your staff is highly trained, mistakes can happen. For example, a crew member might demolish something that wasn't supposed to be touched. In that case, the property owner could sue you for negligence. Professional liability insurance will protect you from any legal fees that could arise in this type of situation. It could also help to pay for any repairs that may be needed.
- Workers' Compensation: If you employ a crew, you are going to need to invest in workers compensation insurance. This type of policy will protect your employees in the event that they are injured on the job, or in the event that they develop a work-related illness. For example, if a piece of machinery malfunctions and an employee sustains an injury, workers comp insurance will help to pay for the medical care that he or she needs, any wages that he or she may lose while recuperating from the injury, and any legal action that the employee might take against you and your business.
- Commercial Equipment: There's no doubt that you have various types of equipment that you use to get the job done. This type of equipment can come with some pretty hefty price tags. Should your equipment become damaged or stolen, you would need to replace it. Commercial equipment insurance can help to protect you from having to pay the exorbitant cost of replacing that machinery out of your own pocket.
- Commercial Auto: If you or your staff uses any vehicles for business-related reasons, commercial auto insurance is a must. This type of policy will protect you and your employees in the event that an accident occurs while operating a vehicle for work-related reasons.
Demolition And Wrecking Contractor's Risks & Exposures
Premises liability exposures are extremely high, both at the contractor's premises where explosives are stored and at any site using blasting material. Demolition and wrecking operations may attract crowds of onlookers. There must be barriers in place to protect the curious. The buildings or structures must be carefully combed for people prior to any destruction. Lack of proper storage on premises or improperly set explosives at the jobsite may result in severe bodily injury, loss of life, and major structural damage, either directly or by shock waves.
The noise from detonation may result in serious hearing impairment. The presence of fuels, flammables, and combustibles at the jobsite poses a significant hazard control challenge. Building services, if not disconnected properly, may result in fumes, gas or water leaks, and shock hazards, as well as interruption of utility services to adjacent properties. The collapse of a structure, intentionally or prematurely, may cause vibration damage to adjacent premises.
The areas around the buildings and the structures nearby should be reviewed and evaluated prior to any destruction to prevent damage and claims for damage predating the demolition. Salvage may involve cutting, compacting, or crushing, which presents fire or explosion hazards. Extraordinary measures must be taken to prevent the entry of unauthorized persons to the insured's premises or jobsite, as explosives are highly attractive to thieves and terrorists.
To control access to the jobsite, the contractor may employ spotters or guards, install gates and barbed wire, post signs, or contact occupants of adjacent properties directly. Equipment and piles of debris are attractive nuisances. All equipment must be disabled when not in operation to prevent untrained individuals from using it. Debris piles must be barricaded to prevent climbing. Fencing must be in place with appropriate warning signs to prevent trespassing. Security guards should be provided as necessary.
Completed operations exposures may be limited in barren unoccupied areas. If there are neighboring buildings or residences, claims may be brought for latent or cumulative structural damage that may not appear until long after the explosives have been detonated.
Environmental impairment liability exposures are high from the storage, use, and disposal of explosives and resulting waste and debris from demolition sites. Lead or stored fuels may contaminate soil and groundwater supplies. The release of dust or methane gases may impair air quality. Friable asbestos (asbestos insulation that crumbles easily and becomes airborne) may pose a serious risk. Proper written procedures and documentation of both the transportation and disposal process is important.
Workers compensation exposure is severe due to the handling and use of explosives. An unplanned detonation can result in severe injury or death to multiple workers at once from fire and explosion. Injury or death can occur from falls, being struck by falling objects, or an attempted robbery. Common hazards include slips and falls, foreign objects in the eye, hearing impairment from noise, cuts and puncture wounds from drilling, bites from insects or vermin, exposure to pollutants and weather conditions, concussions from blasting operations, and back injuries from lifting during loading, unloading, and setup. As operations are often conducted in remote areas, it may be difficult to transport an injured worker to a medical facility to receive prompt treatment.
Property exposures at the contractor's own location are usually limited to an office and storage of equipment and vehicles. The contractor often handles salvage, which may be stored inside or outside. If explosives are stored on premises, there is potential for a severe loss from fire and explosion unless there are superior controls on inventory and access to the explosives' storage areas. Storage must be in accordance with all state and federal regulations.
Local fire departments must be notified and a plan of control and evacuation should be in place. Explosives are target items for thieves and terrorists. Appropriate security measures must be in place including lighting and physical barriers to prevent unauthorized access. Thorough background checks by the ATF or Homeland Security should be done on every employee.
Crime exposure is from employee dishonesty. Background checks should be conducted prior to hiring any employee. All orders, billing, and disbursements must be handled as separate duties and annual external audits conducted. All items should be physically inventoried on a regular basis to prevent theft. If there are explosives, a procedure must be in place to monitor who has access to the explosives and to record all activities.
Inland marine exposures include accounts receivable if the contractor bills customers for services, contractors' equipment, goods in transit, and valuable papers and records for customers', regulators', and vendors' information. If explosives or salvage is transported, drivers must have a Haz-Mat license and be experienced in transport. The vehicle must be properly marked. A variety of drilling equipment is necessary to set the explosives.
The insured may own materials used to set up fences and blockades. If the contractor is responsible for removal of the debris, additional types of equipment may be needed, such as front-end loaders. Equipment on the site may be dropped from heights, strike utility piping, or wires either underground or within the building being demolished. When jobsites are in rural areas or on uneven ground, collision or overturn can occur. Any type of equipment may be damaged or destroyed during blasting operations.
Some equipment, such as cranes, may be leased, rented, or borrowed for a particular job. If equipment, machinery, tools, or supplies are left at jobsites, they may be susceptible to theft and vandalism. Equipment should be secured and rendered inoperable when not in use. Detonating devices, as well as explosives, may be a target for thieves.
Commercial auto exposures are high. Workers, equipment and supplies are regularly transported to and from jobsites. The transport of explosives demands extreme care by drivers due to the potential for fire, explosion, collision, overturn, and theft. Drivers should have Haz-Mat licenses and be fully aware of dangers involved with transporting explosives in populated areas. Transport of any salvage is difficult and requires proper loading to prevent overturn or overflow.
The absence of detailed training and procedures in the event of overturn or spill may indicate a serious morale hazard. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and the records kept in a central location.
What Does Demolition Contractors Insurance Cover & Pay For?
Demolition contractors can be sued for a variety of reasons, some of which include:
Property damage: If the demolition contractor damages property adjacent to the demolition site, they may be sued for the cost of repairs. A demolition contractor can purchase property damage insurance to protect against claims arising from damage to adjacent property. If a claim is filed, the insurance company will investigate the claim and may pay for the cost of repairs up to the policy limit.
Personal injury: If a worker or bystander is injured during the demolition process, the contractor may be sued for medical expenses, lost wages, and pain and suffering. A demolition contractor can purchase workers' compensation insurance to cover injuries sustained by workers during the demolition process. This insurance can also cover the cost of defending against lawsuits filed by injured workers. Additionally, a demolition contractor can purchase general liability insurance to cover injuries sustained by bystanders. This insurance can also cover the cost of defending against lawsuits filed by injured bystanders.
Environmental damage: Demolition contractors may be sued if they cause pollution or other environmental damage during the demolition process. A demolition contractor can purchase pollution liability insurance to cover claims arising from environmental damage caused by the demolition process. If a claim is filed, the insurance company will investigate the claim and may pay for the cost of remediation up to the policy limit.
Breach of contract: If the demolition contractor fails to meet the terms of their contract, they may be sued for breach of contract. A demolition contractor can purchase errors and omissions insurance to protect against claims arising from alleged breaches of contract. If a claim is filed, the insurance company will investigate the claim and may pay for damages up to the policy limit.
Negligence: If the contractor is found to have acted negligently in their demolition work, they may be sued for damages. A demolition contractor can purchase professional liability insurance to cover claims arising from alleged professional negligence. If a claim is filed, the insurance company will investigate the claim and may pay for damages up to the policy limit.
Insurance can protect demolition contractors from these types of lawsuits by providing coverage for various risks.
Commercial Insurance And Business Industry Classification
- SIC CODE: 1795 Wrecking and Demolition Work, 4499: Water Transportation Services, Not Elsewhere Classified
- NAICS CODE: 238910 Site Preparation Contractors, 562910 Remediation Services
- Suggested Workers Compensation Code(s): 5022 Masonry NOC, 5057 Iron or Steel - Erection - NOC, 5213 Dam or Lock Construction - Concrete Work - All Operations, 5403 Carpentry - NOC, 5473 Asbestos Removal Operations - Contractor - NOC & Drivers, 6003 Pile Driving, 7394 Salvage Operation Operations - Marine: Coverage Under Admiralty Law: Program I, 7395 Salvage Operation Operations - Marine: Coverage Under Admiralty Law: Program II - State Act Benefits, 7398 Salvage Operation Operations - Marine: Coverage Under Admiralty Law: Program II - USL & HW Act Benefits
1795: Wrecking and Demolition Work
Division C: Construction | Major Group 17: Construction Special Trade Contractors | Industry Group 179: Miscellaneous Special Trade Contractors
1795 Wrecking and Demolition Work: Special trade contractors primarily engaged in the wrecking and demolition of buildings and other structures, except marine. They may or may not sell material derived from demolishing operations. Establishments primarily engaged in marine wrecking are classified in Transportation, Industry 4499.
- Concrete breaking for streets and highways-contractors
- Demolition of buildings or other structures, except marine-contractors
- Dismantling steel oil tanks, except oil field work-contractors
- Wrecking of buildings or other structures, except marine-contractors
4499: Water Transportation Services, Not Elsewhere Classified
Division E: Transportation, Communications, Electric, Gas, And Sanitary Services | Major Group 44: Water Transportation | Industry Group 449: Services Incidental To Water Transportation
4499 Water Transportation Services, Not Elsewhere Classified: Establishments primarily engaged in furnishing miscellaneous services incidental to water transportation, not elsewhere classified, such as lighterage, boat hiring, except for pleasure; chartering of vessels; canal operation; ship cleaning, except hold cleaning; and steamship leasing. Establishments primarily engaged in ship hold cleaning are classified in Industry 4491; and those primarily engaged in the operation of charter or party fishing boats or rental of small recreational boats are classified in Services, Industry 7999.
- Boat cleaning
- Boat hiring, except pleasure
- Boat livery, except pleasure
- Boat rental, commercial
- Canal operation
- Cargo salvaging, from distressed vessels
- Chartering of commercial boats
- Dismantling ships
- Marine railways for drydocking, operation of
- Marine salvaging
- Marine surveyors, except cargo
- Marine wrecking: ships for scrap
- Piloting vessels in and out of harbors
- Ship cleaning, except hold cleaning
- Ship registers: survey and classification of ships and marine
- Steamship leasing
Demolition Contractors Insurance - The Bottom Line
As a demolition contractor, it's important to make sure that you are properly protected from the financial that could arise as a result of the many liabilities that your business faces.
To find out more about what type of insurance policies you should carry, how much coverage you should invest in, and if there are any specialized policies that are designed specifically for demolition contractors, speak to a reputable insurance broker.
Additional Resources For Construction Contractors Insurance
Learn about construction contractors insurance, including how much the premium costs and what is covered - and how business insurance can help protect your construction business from lawsuits.
- Blasting & Drilling Contractors
- Bridge Contractors
- Building Contractors
- Cable Layers
- Demolition Contractors
- Dock & Pier Contractors
- Dredging Contractors
- Foundation Layers
- General Contractors
- Road Contractors
- Sewer Contractors
- Steel Erection Contractors
- Surety Bonds
The construction industry is a high-risk industry that requires business insurance to protect against potential losses. There are several reasons why the construction industry needs business insurance:
Liability risks: Construction projects often involve working on other people's property, which can lead to potential liability risks if any damages or accidents occur. Liability insurance helps to protect against these risks by providing coverage for any legal fees or damages that may arise.
Property damage: Construction projects can also be at risk for property damage, whether it's the company's own equipment or tools, or the property being worked on. Commercial property insurance including inland marine helps to cover the cost of repairs or replacement of any damaged property.
Worker injuries: Construction is a physically demanding industry, and accidents and injuries are a common occurrence. Wrokers comp helps to cover the cost of medical treatment and lost wages for injured workers.
Financial losses: Construction projects can be disrupted by a variety of factors, such as weather, delays, or changes in scope. Business insurance helps to protect against financial losses that may occur as a result of these disruptions.
Overall, insurance is an essential component of the construction industry as it helps to protect against a range of potential risks and losses. Without it, companies in the construction industry would be vulnerable to financial ruin and may not be able to continue operating.
Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Surety Bonds, Accounts Receivable, Builders' Risk, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Umbrella Liability, Business Automobile Liability and Physical Damage, Hired and Nonowned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Contractors' Equipment, Goods in Transit, Installation Floater, Cyber Liability, Employment-related Practices Liability, Environmental Impairment Liability, Stop Gap Liability, Unmanned Aerial Vehicles (UAV) (Drones).