What Agents Need to Know About Insuring Contractors

Insurance for builders and contractors is a specialized area, but it’s one that can be very lucrative for insurance agents. Overall growth in the economy has increased the demand for new housing, buildings, roads and other structures across the country, creating more new jobs in the construction industry. According to data from the US Bureau of Labor Statistics (BLS), employment of construction and extraction occupations is projected to grow faster than the average for all occupations; 11 percent from 2016 to 2026 with a gain of about 747,600 new jobs. In the United States, private construction spending reached around 899 billion U.S. dollars in 2016. New construction is forecasted to reach over 1.4 trillion U.S. dollars by 2021.

The American Road & Transportation Builders Association (ARTBA) recently released data on the transportation construction industry’s performance in the first half of 2018 as well as how it is projected to perform through the next several months. According to the ARTBA, total transportation construction activity should average out at about 2% growth overall by the end of the year as construction activity finishes up. Growth for highway construction alone is projected to be up around 2% to 3% for the entire year as well. A drop in bridge construction (8% down in 2018) could contribute to a smaller number in overall transportation construction growth, however, airport construction has helped considerably, with over 64% growth in 2018.

The noticeable growth in the construction industry represents an opportunity for insurance agents who are looking for a valuable niche to place themselves in. Agents can partner with an expert wholesaler like ATM insurance to instantly place themselves in a position to provide specialized insurance to contractors and construction clients. For those looking to dip their toes into this industry, read below to find out what agents need to know about insuring contractors.

Exposures and Risks

What kind of risks do contractors and construction professionals face? One of the greatest risks in the construction industry is bodily injury, which can often be fatal. The Occupational Safety and Health Administration (OSHA) cites four of the most preventable causes of deaths in the construction industry, nicknamed “The Fatal Four,” as:

  • Falls — 384 out of 991 total deaths in construction in CY 2016 (38.7%)
  • Struck by Object – 93 (9.4%)
  • Electrocutions – 82 (8.3%)
  • Caught-in/between – 72 (7.3%)

Contractors also face a number of property and liability risks including but not limited to:

  • Damage to their office or work space.
  • Repetitive injuries suffered by employees.
  • Loss of equipment and tools due to theft, damage or neglect.
  • Destruction of structures as they are being built.
  • Claims of negligence from clients, partners or subcontractors.

When working with a new contractor client, it’s important to ask the right questions to help better understand their insurance needs and find a policy that will fit them well. Most contractors will benefit from general liability insurance, property insurance, workers’ compensation insurance and even commercial auto insurance, but they may need more specialized coverage as well. Partnering with a wholesaler or MGA that offers access to exclusive Contractors General Liability insurance programs can help you offer the best coverage solutions for your contractor clients.

About American Team Managers Insurance Services

Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (714) 414-1200 to speak to a representative.