Why is Insurance in Construction Important in NYC?

After the onslaught of the worldwide Covid-19 pandemic, New York City has recorded a steady increase in construction investment despite a reasonable decline of the economy during the massive lockdowns and crisis. The construction spending of the city is recorded at an estimated $86 Billion according to the New York Construction Outlook. This indicates the positive importance of the construction industry to New York City.

The uncertainty brought about by the pandemic has spotlighted the importance of insurance coverage and protection against damages to property and assets. Reputable contractors look out for their clients by providing them with insurance against certain liabilities that are covered under a general liability policy, but clients should also understand their role and responsibility in getting insured as an additional layer of protection during and after construction.

Construction Risks in NYC

Construction projects carry a level of risk that high-end general contractors manage through skill and careful planning. According to the Federal Bureau of Labor Statistics, the construction workforce in New York City only makes up about 5% of the population, but they account for around 27% of work-related injuries.

Several risks that derail a project are due to unforeseen circumstances in the field such as these accidents. A contractor must be properly insured not only for their benefit and their employees but also for their client's personal interest as a homeowner and business proprietor, especially with New York's Labor Laws that impose strict liability against the contractor and the owner.

Types of Insurance Needed

For Contractors

General Contractors should carry several types of insurance to protect from expenses caused by construction mishaps:

1. General Liability Insurance: Covers third-party bodily injury and property damage
2. Workers' Compensation Insurance: Required by law to cover employees' work-related injuries
3. Builder's Risk Insurance: Covers damage to the building under construction
4. Professional Liability Insurance: Covers errors and omissions in design or professional services
5. Commercial Auto Insurance: Covers vehicles used for business purposes

For Property Owners

For homeowners, it's a good idea to revisit their Homeowners Insurance to ensure adequate coverage and upgrade their policy if necessary. Likewise, business owners must validate their corresponding coverage and check if there is a need to update, especially with inflation in real estate property values.

Property owners should consider:

1. Homeowners Insurance with Construction Endorsements
2. Additional Liability Coverage
3. Course of Construction Insurance

Tips for Protecting Your Assets

When starting a construction project, avoid the mistake of hiring a person who is not properly licensed and experienced. Similarly, protect your assets by getting your property insured and hiring an insured contractor to do the job for you. Here are a few tips to remember:

• Have a written contract instead of a verbal agreement, even if it is with a long-time associate
• Screen your contractor thoroughly. Don't be scared to ask questions. A reputable contractor assists you in understanding the processes involved in construction
• Make sure your contractor is insured and is registered to practice in the city. Research their experience and check for reviews if available
• Check your property's insurance as well. Make sure that it is updated. Homeowners insurance, for residential owners, protects one's home and possessions against damages and liabilities
• Ask for insurance advice from a professional to understand your coverage needs

The Unique NYC Construction Environment

New York is unlike many cities in the country. Its unique building construction regulations, which equate to an added layer of expense to the housing market, are further worsened by expensive construction costs.

Safeguard your assets by choosing a properly insured contractor and understanding the role of insurance for your property because a lawsuit is more costly to defend and may result in multi-million dollar settlements. Property owners must know and understand the law to take necessary precautions.

Conclusion

Insurance in construction is not just a regulatory requirement—it's an essential protection for all parties involved in a construction project in NYC. The high-risk nature of construction work, combined with New York's strict labor laws, makes proper insurance coverage a necessity rather than an option.

By ensuring both contractors and property owners have appropriate insurance coverage, construction projects can proceed with reduced financial risk, providing peace of mind to all stakeholders involved.

CooperBuild is a registered and licensed high-end residential and commercial contractor in NYC with comprehensive insurance coverage. Let us help you with all your construction needs while ensuring proper protection for your project and property.