Insurance is expensive, and it often gets you thinking – is this really something I need or can I get away without it?

In many cases, insurance is not only just necessary, it is mandatory. But before we get into how or why, it’s important to understand that the term construction insurance is actually an umbrella term which captures several different types of insurance policies. For a breakdown of some of the most common kinds of insurance in construction, check out my last article here.

Expanding further on the topic of insurance, in this article I will focus more on when each of these policies apply to your business, as well as discuss some other factors to consider that may affect how much you end up paying.

Insurance rates have been increasing year over year over the last decade, and although I believe a lack of skilled labour is a big part of the problem on a national level, there are still other factors to consider that can greatly impact your individual insurance costs.

A variety of factors can affect the cost of construction insurance policies. Although some of these policies differ greatly in terms of what they cover or who provides them, the factors listed below often have the same influence on each of them in terms of the price you pay.

1. The credit histories of your business, policy holder, and named insureds
2. The size of the project and business
3. The experience of your business and other contractors
4. The coverage limits and deductibles selected
5. The location of your business or project

There may be other factors that can affect the cost of your insurance, especially if there are special or unique risks involved, but the factors listed above are typically what most underwriters use to estimate the risk associated with insuring your business/project.

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