business interruption insurance frequently asked questions
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 Recommendations for clients planning to do construction projects

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What should I consider before doing construction?


Next to Employment Practices Liability, Construction Defect Liability is one of the largest areas of litigation in the United States. Before you consider building something or having something built for you, there are a number of safeguards that must be in place. A summary of many of these safeguards is outlined below, but this is truly a summary. You need to discuss all such considerations with your attorney. We are not providing legal counsel and the following suggestions are minimal, at best.

Do not act as "owner builder", the liability is far too great.

Hire a licensed and insured general contractor to provide all aspects of the job.

Enter into a well-structured contract with the general contractor. Key factors you need to insist upon are:

  • The contract must contain an indemnity agreement in your favor.
  • You must require that the GC be named as additional insured by all subs and that both the GC and each Sub name you as an additional insured on both the General Liability and Auto Liability, and you must receive copies of these endorsements.
  • Each entity must have workers’ compensation coverage and you must be listed as a certificate holder, and receive a certificate of insurance.
  • You must require a level of protection that is acceptable to you but in no case less than $1,000,000 in limits.
  • You must not pay for any contracts or sub-contracted services directly, the GC must make all such payments and then you may reimburse the GC if that is in accordance with the terms of your contract.
  • All required proof of insurance must be in place and in your possession before you allow work to begin.

Notify your insurance broker of your plans and discuss four types of coverage that you should be prepared to purchase:

  • General Liability
  • Owner’s and Contractor’s Protective Liability
  • Course Of Construction Property Insurance
  • Workers’ Compensations Insurance

If you are acting as the "owner builder", you need to do all of the above but a great deal more responsibility falls on your shoulders and the cost of insurance goes up by over 600%. Insurance and contract finalization are two areas that are often understated.

Small Business Insurance, consultant insurance, errors & omissions insurance, general laibility insurance, technology insurance, E & O, fidelity bond - Contact Mr. DJ Coates - 626-397-4700

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United Agencies Small Business Insurance Division (Contact Us by Email)
525 Cordova St., Ste. 200 // Pasadena, CA 91101-2552 
Phone: 800-378-5554 - or - 626-397-4700 // Fax: 626-683-7682

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