3 Things Contractors Should Consider When Picking Insurance

Potential gaps in coverage in areas such as construction defects, contractors pollution or data breaches can prove costly.

Construction workers and architects at a construction site viewed from above

March 22, 2018

A booming construction market, including an increase in infrastructure spending, means the need for contractor liability insurance has never been greater.

But it’s also critical that contractors choose the right insurance coverage to minimize the unique risks they face. Although contractors often need liability insurance coverage, they don’t always purchase it because they may wrongly assume their general liability policy will be sufficient.

The following three potential gaps in coverage can prove to be costly if a contractor is not sufficiently covered.

1. Construction defects

This covers a problem with the design or construction of a structure, or faulty workmanship that leads to damages or injuries. It can also cover lawsuits stemming from defective or damaged building materials.
2. Contractors pollution

Injuries to third parties, property damage, defending against a related lawsuit or cleanup costs that result from pollution conditions should all be covered. But these costs are often listed under the pollution exclusion in general liability policies. Coverage is also needed for pollution caused by subcontractors working on the insured’s behalf.
3. Cyber

Contractors need to consider coverage for data breaches. Some examples involve the use of drones, smart buildings and data stored on laptops. If a drone is stolen or misplaced and falls into the wrong hands, the data it collected could be stolen. Buildings that integrate information technology to improve efficiency can also be hacked into by others. And in the case of laptops, which are used today by most contractors on job sites, highly sensitive data could be breached.

About the author

Dan Gmelin is senior vice president of underwriting and head of Architects & Engineers and Miscellaneous Professional Liability at Argo Pro. Gmelin previously served as senior vice president and A&E product head at Hiscox Insurance Company. He was one of the first employees at Hiscox and helped build the company from the ground up. Before joining Hiscox, he was a senior underwriter at Professional Indemnity Agency. He also previously served as a financial adviser with CIBC Oppenheimer’s High Net Worth Private Client Group. Gmelin graduated from the University at Albany, SUNY.

About Argo Pro

Argo Pro, a member of Argo Group, is a leading provider of professional lines insurance products and services that can accommodate medium and large organizations on an admitted and nonadmitted basis. Through a single operating platform and a robust network of appointed wholesale and retail distribution partners, Argo Pro offers a broad, customizable portfolio of errors and omissions and management liability insurance solutions. Argo Pro maintains offices in Chicago, New York City, San Francisco, Scottsdale and Hamilton Township (New Jersey).

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