Protecting Your Business with Excavation Liability Insurance
- Essential Coverage: Excavation liability insurance is crucial for protecting against risks like property damage, accidents, and injuries during excavation work, acting as a financial safety net.
- Factors Influencing Cost: The cost of excavation liability insurance varies based on coverage amount, business size and revenue, location and scope of work, and previous claims history, with average premiums for small to medium-sized businesses ranging from $900 to $2,500 annually.
- Choosing the Right Provider: Selecting an insurance provider with expertise in construction and excavation is vital. Reputable providers include The Hartford, Travelers Insurance, Farmers Insurance, and Hiscox Insurance, each offering specialized plans and features for contractors.
If you're in the excavation business, you know that it's an industry filled with potential risks. That's where excavation liability insurance comes into play.
Despite being at the lower end of a business owner's priorities, it's not that complicated. We've had this insurance coverage for years with our business and it's one of the best things we've ever done.
What is excavation liability insurance?
Excavation liability insurance is a specialized form of insurance designed to protect excavation contractors against specific risks associated with their industry.
This includes property damage, accidents, and injuries that could occur during excavation work.
Think of it as a safety net that helps you manage the financial risks of unforeseen events. It's a balance of risk and ensures the longevity of your company.
It's a bit different than other insurances due to the risk involved in the excavation industry.
Here's a breakdown of the various types of insurance so you can see how this insurance differs.
| Type of Coverage | Description |
|---|---|
| General Liability Insurance | Covers third-party injuries and property damage caused by excavation activities. |
| Workers' Compensation | Provides benefits to employees who get injured or become ill as a result of their job. |
| Property Insurance | Protects business property and equipment, including excavation machinery, from damage or theft. |
| Vehicle Insurance | Covers damages and liability issues related to vehicles used in excavation operations. |
| Professional Liability | Protects against claims of negligence or mistakes in professional services provided. |
| Business Interruption | Compensates for lost income and expenses during a temporary shutdown due to a covered event. |
| Umbrella Insurance | Offers additional liability coverage beyond the limits of other policies. |
| Environmental Liability | Covers claims related to environmental damage caused by excavation activities. |
As a small business, you may even need one or more of these types.
Why do you need insurance?
Some business owners might forego excavation liability insurance, but there are a few reasons why it's essential to have it—
- Legal requirements. In many places, having liability insurance is a legal requirement for operating an excavation business. Check your local and state laws to see if you need it.
- Financial protection. It covers potential lawsuits or claims that can arise from accidents, protecting your financial stability. Your LLC will only protect your personal assets. However, insurance will protect your business assets.
- Client confidence. Having this insurance often boosts clients' confidence in your services, knowing that they're protected, too. You may have seen other businesses stating they're "bonded and insured."
- Project requirements. Some contracts may require you to have a specific amount of liability insurance before you can even bid on a job. These tend to be larger contracts for businesses or governments.
Those are just a few reasons why you need to get this insurance.
So, if it's a requirement, how much does it cost?
Cost of excavation liability insurance.
The cost of excavation liability insurance varies based on several factors. These are some of the most common reasons for fluctuations—
- Coverage amount. More coverage typically means higher premiums. If you're doing bigger jobs with more risk, you might want more coverage with lower deductibles.
- Business size and revenue. Larger businesses with higher incomes may face higher insurance costs. This is because you have more on the line than a smaller business. This also correlates to the coverage amount.
- Location and scope of work. High-risk locations or extensive excavation projects can increase insurance rates. If you're excavating in large urban areas, there's more risk for accidents, so costs may be higher. Also, the type of work (i.e., excavation, trenching, plowing, etc.) can affect what your premiums are.
- Previous claims history. Insurance companies are in the business of identifying risk. If you've had prior claims, your insurance premiums might be higher.
On average, small to medium-sized excavation businesses can expect annual premiums to range from $900 to $2,500 for general liability insurance.
However, this can vary widely based on the factors mentioned. When you give an insurance agent a call, they'll be able to provide you with a more accurate quote based on their company policies.
Reputable insurance providers.
When looking for providers, it's essential to choose companies that specialize in or are familiar with construction and excavation insurance.
While we've used a couple of these insurance providers, all of these have solid reviews. Some reputable providers include—
| Insurance Company | Specialization in Contractor Insurance | Notable Features | Potential Limitations |
|---|---|---|---|
| The Hartford | Offers specific plans for contractors | - Wide range of business insurance options - Known for strong contractor coverage | - May have higher premiums for specialized coverage |
| Travelers Insurance | Specialized construction insurance | - Specific coverage for excavation contractors - Comprehensive construction policies | - Coverage specifics may vary by location |
| Farmers Insurance | Tailored solutions for contractors | - Customizable policies for different contractor types - Includes excavation contractors | - May not offer as many specialized options as others |
| Hiscox Insurance | Business insurance with customization | - Flexible coverage options - Ability to tailor policies to specific business needs | - Smaller company, which might affect resource availability |
Get your insurance in order!
Investing in excavation liability insurance is a smart move for any contractor in this field. It not only meets legal and client requirements but also provides peace of mind, knowing that your business is protected from the unique risks of excavation work.
It seems easy to pass up and try to save money where you can, but insurance is not that place. We never recommend skipping on insurance. Of course, assess your risk, understand your laws, and speak with an attorney to see how insurance lines up with your business.
