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What Types Of Insurance Does A Welding Business Need?

What Types Of Insurance Does A Welding Business Need?

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What Types Of Insurance Does A Welding Business Need?

Welding Business 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 A Welding Business Need?

Welding businesses assist in many projects, such as demolition and building projects. Working with metal has inherent hazards, but welding businesses take on these projects despite the associated dangers and often find that work is continually in demand for their specialty services. However, even with expert training, welding businesses have risks and hazards that threaten their financial well-being, making insurance an essential aspect of a successful business plan. 

Related: Guide to starting a welding business

What Are Some Risks for a Welding Business?

Some of the risks that welding businesses encounter include the following:

  • Employee injuries
  • Faulty work
  • Equipment breakdown
  • Car accidents
  • Fire damage

Employee Injuries

One of the most significant hazards for welding businesses is employee injury. On-site workshops have a considerable number of hazards. For example, welding requires heavy power equipment, forklifts, cranes, and hot tools that can cause severe injury. Additionally, large moving pieces of metal that fall from a forklift or crane can crush, dismember, or cause life-threatening injuries.

Employees at the on-site workshop face several other injury hazards. For example, while welding, sparks, and flying objects can cause burn injuries. Additionally, contact with harsh chemicals and substances may lead to skin, eye, and respiratory irritation. Employees may also suffer back, shoulder, or knee injuries caused by lifting, moving, or carrying heavy workshop items. 

Other employee injuries include the following:

  • Slips, trips, and falls
  • Injury from falling materials at off-site demolition projects
  • Illness from fumes

Faulty Work

Welding businesses risk extensive liability claims if the work they provide is faulty and causes structural damage or collapse. For example, the bodily injury and property damage claims could be vast if the welding business negligently or incorrectly welds a structure that later collapses.

Other issues with faulty work include water damage from poorly welded plumbing, equipment breakage, and repeat work. Defective work can result from negligence, poor training, inexperience, lack of communication, or equipment malfunction.

Equipment Breakdown

Equipment breakdowns primarily happen due to mechanical or electrical failure. Welding businesses utilize many custom and specialty equipment on-site to cut and bond metal. So, if equipment breaks or fails, the entire business flow can suddenly halt, resulting in delayed projects and a potential loss of income and clients.

Car Accidents

Welding businesses may be required to complete off-site work, putting the business at risk of car accidents. An at-fault car accident can lead to bodily injury and property damage liability claims that are often costly. Accidents can happen for a variety of reasons, but some of the more common causes include

  • Driving in unfamiliar locations
  • Driver fatigue
  • Distracted driving
  • Inclement weather
  • Poor visibility 
  • Speeding
  • Traffic

In addition to liability hazards, collisions may also cause physical damage to company-owned vehicles. Although collisions are a common source of physical damage, other sources include the following:

  • Vandalism or theft
  • Falling objects
  • Unbalanced or too-heavy loads
  • Break failure
  • Blown tires

Fire Damage

Welding businesses typically have on-site workshops where much of the cutting and metal bonding occurs, and these areas have a significant hazard of fire damage. For example, malfunctioning wiring, faulty equipment, sparks, and overheated equipment can cause a fire.

Further, welding businesses also have a high fire load. A high fire load means flammable objects and substances are present and contribute to a fast-spreading fire. Welding businesses have several flammable materials such as metals, gasses, chemicals, solvents, degreasers, equipment, and trash.

Hiscox.com

What Types of Insurance Policies Should a Welding Business Consider?

Insurance policies provide important financial coverage to protect businesses from the liabilities and costs that follow incidents. Some of the key insurance policies that a welding business should consider include the following types of insurance:

  • Workers’ compensation insurance
  • General liability insurance
  • Equipment breakdown insurance
  • Commercial auto insurance
  • Commercial property insurance

Workers’ Compensation Insurance

A workers’ compensation policy provides coverage for employee injury claims. For example, an employee who suffers a burn injury from sparking equipment on the job site may have medical bills and lose income while they are unable to work. As a result, the employee accrues extensive costs, and the business is exposed to a potential lawsuit. 

Fortunately, a workers’ compensation policy protects the employee and the business from injury-related costs and liabilities. For instance, a workers’ compensation policy provides the following coverages:

  • Payment of medical bills
  • Reimbursement for lost income
  • Payment for ongoing rehabilitation care
  • Disability income
  • Coverage for funeral expenses

General Liability Insurance

A general liability policy (also referred to as welder liability insurance) is a core policy in many business insurance packages. A liability policy for products and completed operations protect the business from bodily injury and property damage claims resulting from the products or completed work. General liability coverage protects business owners from many claim-related expenses, including

  • Medical bills
  • Property damage repairs
  • Legal defense costs
  • Settlements

A general liability policy can also cover bodily injury and property damage claims to third parties that occur on-site or due to the actions of the welding business. These risks are covered separately by a general liability policy for premises and operations. Normally, these two liability policies are bundled under one policy by the same insurance company. 

Equipment Breakdown

An equipment breakdown policy covers equipment for perils such as mechanical and electrical failure, perils that are usually excluded from a property insurance policy. Equipment breakdown coverage can either be added to an insurance package or sold as a standalone policy and covers 

  • Equipment repairs
  • Lost income
  • Rushed or temporary repairs
  • Additional costs associated with the breakdown

Wear and tear damage can also cause delays and expenses, however, wear and tear are not covered by an equipment breakdown policy. Regular maintenance and inspections can help prevent project delays and expensive rush repairs for broken, worn-down equipment.

Commercial Auto Insurance

A commercial automobile insurance policy includes two main lines of coverage: liability insurance and physical damage insurance. Liability insurance covers claims that result from at-fault accidents, and physical damage insurance covers company-owned vehicles for collision damage and comprehensive damage (non-collision events).

Liability insurance includes coverage for claims of bodily injury and property damage. For example, if an employee rear-ends another vehicle, the business would be liable for the resulting damage to the third party’s vehicle (property damage) and any injuries (bodily injury). Liability insurance would cover this claim and includes coverage for

  • Third-party medical bills
  • Third-party property damage repairs
  • Legal fees
  • Settlements
  • Uninsured motorist coverage

Physical damage insurance covers damage to company vehicles. Physical damage insurance covers the cost of repairs or reimbursement for the vehicle’s value in the event of a total loss. Some examples of covered perils include

  • Collision
  • Falling objects
  • Hail
  • Vandalism
  • Theft

Commercial Property Insurance

A property insurance policy covers business-owned structures and business items for physical damage caused by various hazards, including 

  • Fire
  • Vandalism
  • Theft
  • Wind
  • Hail
  • Water damage from leaking pipes

Business structures are covered up to an agreed policy limit determined by the rebuilding cost. So, a property insurance policy would cover the cost of completely rebuilding the structure in a total loss.

Business items are also covered up to an agreed policy limit. Business items include things that are not permanently fixed to the structure. For example, this would consist of furniture, equipment, inventory, supplies, and office supplies. Typically, items are replaced or repaired based on their value at the time of loss, called actual cash value coverage. In some cases, insurance companies offer replacement cost coverage that reimburses for items at the cost of replacing the lost items with new items. 

How Much Does Insurance Cost for a Welding Business?

Insurance costs vary depending on the needs of each welding business. For example, a small welding business with few employees and no company vehicles will need less coverage than a welding business with numerous employees and a large fleet of company vehicles. 

Some factors that affect risk exposure and insurance coverage amounts include the following:

  • The number of employees on the payroll
  • Employee training and certification
  • The quality and condition of the equipment
  • Safety precautions and loss prevention measures
  • The number and value of company-owned vehicles
  • Fire suppression systems in the business structures
  • Any past or current lawsuits or insurance claims

The best way to determine insurance costs is to contact an insurance company for a quote. It would help if you got multiple quotes to compare coverages, bundle discounts, and prices. This way, you can pick a policy package that best fits your business’s needs.

What Types Of Insurance Does A Welding Business Need?

What Types Of Insurance Does A Welding Business Need?

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