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What Types Of Insurance Does An Excavating Business Need?

What Types Of Insurance Does An Excavating Business Need?

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What Types Of Insurance Does An Excavating Business Need?

Excavating Insurance Quotes

Costs for business insurance can vary greatly, and getting insurance quotes from multiple companies is recommended in order to get the best pricing.

Coverwallet and Hiscox offer easy business insurance quotes at affordable prices.

What Types Of Insurance Does An Excavating Business Need?

Grading land, removing trees, and digging foundations are complex projects rife with danger, but excavating businesses gladly take on these projects and more. And, as many individuals and businesses need an excavator’s assistance, there is no lack of profitable work for the business.

However, these big projects require professional assistance because there is risk involved. As a result, excavating businesses need well-rounded insurance policies to protect themselves from risks.

Related: Guide to starting an excavating business

What Are Some Risks for an Excavating Business?

Many dangers and hazards threaten the financial well-being of excavating businesses. Some examples of the risks include the following:

  • Damage or loss to equipment
  • Property damage and third-party injuries
  • Employee injuries
  • Car accidents

Damage or Loss to Equipment

Excavating businesses utilize heavy and expensive equipment to complete projects, and this equipment is exposed to hazards that cause loss or damage, such as theft, vandalism, and breakage. Additionally, the business uses many small hand tools and power tools at job sites that can also be damaged or stolen, causing service delays and additional costs.

One of the main reasons that equipment is damaged is due to incidents during transit. And because each project is at a different location, expensive equipment will often be in transit. For example, abrupt motions, car accidents, and loading and unloading of the equipment can lead to falls, dents, and broken parts.

Another loss or damage exposure occurs when equipment is left overnight at job sites, putting the equipment at risk of damage, vandalism, and theft. In particular, unsecured job sites are more at risk of equipment theft and vandalism.

Property Damage and Third-Party Injuries

At job sites, heavy equipment and moving objects threaten nearby people and property. Excavating businesses also have a less significant, but still present, risk of injuries in the office, such as slips, trips, and falls. However, the majority of liability concerns occur at job sites.

At each job site, excavating businesses have a property damage liability concern. For example, utility pipes and underground wires can be damaged while digging, interrupting regular utility service to nearby properties. Additionally, falling trees or moving dirt or rocks can harm houses, cars, fences, and other items.

Additionally, there are plenty of third-party injury risks at job sites. For instance, bystanders can be injured by falling or moving objects, such as trees, debris, and heavy equipment. Third-parties may also suffer injuries from falling into trenches and holes, especially in unsecured job sites.

Employee Injuries

Employees also encounter many workplace hazards. In the office, the main concern for employees is injuries from slips, trips, and falls. Trip and fall injuries can also occur at job sites, however, job sites will also have more severe hazards. 

For example, job site injury hazards include 

  • Falling into ditches
  • Being crushed by falling trees or debris
  • Injuries from malfunctioning equipment or blasting
  • Cave-ins from land movement
  • Illness from exposure to harmful chemicals and fumes

Although employee injuries at job sites can be severe, they are often preventable with safety training and precautions. However, the injury risks increase with poor employee safety training or enforcement of safety procedures, such as wearing appropriate protective gear. 

Vehicle Accidents

Each excavation project takes place at different locations, so the excavating business will frequently drive between job sites. As a result, the business will have substantial exposure to car accidents, leading to both liability lawsuits and damage to company vehicles. 

Car accidents can cause financial hardships for a business because liability lawsuits are usually expensive claims; damage to company vehicles is not only costly but may also result in delayed operations. Some of the common reasons that a car accident may occur include the following:

  • Operating vehicles with large or heavy loads
  • Driving in unfamiliar locations
  • Inclement weather
  • Distracted driving
  • Driver fatigue
  • Traffic

Hiscox.com

What Types of Insurance Should an Excavating Business Consider?

Although excavating businesses encounter many risks, some of which are serious hazards, insurance helps alleviate the financial pressure that incidents can cause. It is an essential aspect of any business plan. Some of the core excavation contractor’s insurance policies that to consider include

  • Inland marine insurance
  • General liability insurance
  • Workers’ compensation insurance
  • Commercial auto insurance
  • Commercial property insurance

Inland Marine Insurance

An inland marine insurance policy protects business equipment and property that moves across land. For instance, this policy would cover the mobile equipment and heavy machinery that transfers between job sites. Inland marine insurance covers the equipment for loss, theft, and damage under a line of coverage called an equipment floater.

An equipment floater covers the equipment wherever it goes and is not limited to a permanent location, making this insurance coverage ideal for excavating businesses. In addition to covering heavy machinery, a heavy equipment floater covers other business items, such as hand tools, power tools, inventory, supplies, and electronic devices.

General Liability Insurance

General liability coverage protects the business from claims of bodily injury or property damage that occur on business property or as a result of the excavating business’s work. For instance, this policy would cover the liability for damage to a property caused by the equipment operator error, such as digging that hits underground utilities or damages a nearby fence.

A general liability policy is important as excavating businesses have countless hazards at their job sites. Fortunately, a general liability policy covers many claim-related costs, including

  • Third-party medical bills
  • Third-party property damage repairs
  • Legal defense costs
  • Settlements

Workers’ Compensation Insurance

Workers’ compensation coverage protects the business against claims of employee injuries. An employee’s expenses can accumulate quickly, especially if the injury prevents the employee from working. A workers’ compensation policy covers many of the employee’s injury-related expenses while also protecting the business from potential lawsuits.

For example, some of the injury-related expenses that a workers’ compensation policy covers include the following: 

  • Medical expenses
  • Lost income
  • Rehabilitation care
  • Disability income
  • Funeral expenses

Commercial Auto Insurance

A commercial automobile insurance policy provides two key coverages: liability insurance for bodily injury and property damage and physical damage insurance for business-owned vehicles. The risk of car accidents may be high for frequently on-the-road businesses like excavating businesses, so ample coverage is essential.

Liability insurance is the main coverage on a commercial automobile insurance policy. This coverage insures events where the business is at fault in an accident and there are injuries or property damage. Liability insurance can also include uninsured motorist coverage for accidents where another party is at fault but does not have insurance. 

Physical damage coverage is another main coverage that is sometimes excluded for older vehicles. Physical damage insurance covers the business’s vehicles for damage caused by collisions and non-collision events, called comprehensive insurance. Some examples of non-collision events that are commonly covered include hail, wind, theft, vandalism, and falling objects.

Commercial Property Insurance 

The cost of excavating equipment is high, so obtaining commercial property insurance is important to protect not only equipment but also inventory, furniture, etc. Business structures and property are also covered for the following hazards:

  • Fire
  • Wind
  • Hail
  • Vandalism
  • Theft
  • Malicious mischief
  • Water from leaking pipes

Structures are covered up to an agreed policy limit, which is determined by the rebuilding cost. Qualities such as customization and built-in specialty equipment can drive up the value of the building’s structure, thereby increasing the insurance policy’s coverage limit.

How Much Does Insurance Cost for an Excavating Business?

Insurance costs fluctuate from one business to the next due to the varying levels of risk and required coverage amounts. For example, an excavating business with few employees and a handful of company vehicles will have lower total coverage limits than a large excavating business with many employees and vehicles. 

Many factors influence the amount of risk a business has and the amount of coverage it should carry on insurance policies. For example, some of those factors include:
– The number and value of mobile equipment
– The condition and maintenance of equipment
– The number of employees on the payroll and wages paid
– Employee training and certification
– Job site safety precautions and security
– The number and value of business-owned vehicles
– Any past or current lawsuits or insurance claims

As insurance premiums vary, the best way to determine costs is to contact an insurance company for a customized insurance quote. With a quote, you will have a general idea of the coverage amounts your business will need and overall pricing. In general, it is ideal to contact multiple companies for a quote so that you can compare options and pick a policy package with the best coverage for a reasonable price.

What Types Of Insurance Does An Excavating Business Need?

What Types Of Insurance Does An Excavating Business Need?

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