General construction: permits, planning, hiring
Builder's insurance and bonds: what to ask for
Insurance and bonds protect you if work goes wrong or a contractor fails. Ask for proof, not promises.
Insurance and bonds protect you if work goes wrong or a contractor fails. Ask for proof, not promises.
Common insurance
- General liability: third-party injury and property damage.
- Workers' compensation: injuries to the contractor's own workers, required in many places.
- Builder's risk: covers the project under construction against fire, weather, theft and similar; who buys it should be in the contract.
- Professional liability: for design errors by the designer.
- Auto and equipment cover as relevant.
Bonds
A surety bond is a three-party guarantee. Performance bonds support completion if the contractor defaults, payment bonds support payment of subs and suppliers, and bid bonds support a bidder's commitment to sign. Bonds cost money and are more common on larger or public work.
How to check
- Ask for a certificate of insurance and have it sent directly by the insurer or broker.
- Check limits, dates and the named holder.
- Ask to be named as an additional insured where appropriate.
- For bonds, verify with the surety.
Things certificates do not show
They summarize cover; they do not show exclusions. Ask your own broker or lawyer to review the policy terms for a larger project.
Offsite work
Transit and storage of factory-built components need cover too. Clarify who holds the risk at each point; see delivery damage records.
Quick answers
- Is builder's risk the same as liability? No. Builder's risk covers the work itself; liability covers third-party claims.
- Do I need a bond? Not always. It depends on project size, lender and local rules.
- Who pays for builder's risk? The contract states it; either party may buy it.
Rules differ by country, state and city. Confirm requirements with your local authority having jurisdiction and with the licensed professionals on your project; nothing here is legal, engineering or financial advice.
Questions people ask
Is builder's risk the same as liability?
No. Builder's risk covers the work itself; liability covers third-party claims.
Do I need a bond?
Not always. It depends on project size, lender and local rules.
Who pays for builder's risk?
The contract states it; either party may buy it.
Sources and further reading
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