It’s a quite challenging time to be in the construction industry. Though many areas of the country are seeing increasing demand for new homes and commercial buildings, companies themselves are struggling with a robust economy that has one of the lowest unemployment rates in recent history. In fact, in the fall, the construction industry experienced another drop of 1.1% down to 3.4% unemployment, making it hard to find the type of talent you need to operate your business at the most efficient level.
And, it’s impacting your insurance rates as well. If you’re in the market for new construction equipment insurance coverage or an improved liability insurance plan, chances are good you’re finding rates are increasing. Why is this, and what can you do about it as a business owner?
Insurance Companies Are Being Selective About Who They Insure
Insurers are seeing increasing risk when providing coverage to construction industry businesses. Though the industry has always had a significant amount of risk to them, there are several key reasons why they’re being more selective in who they insure.
A key reason for this is the inexperienced workers within the industry. With 80% of construction companies claiming they are struggling to fill hourly positions, according to the Associated General Contractors of America, that’s putting strain on their options. They are filling available jobs with inexperienced operators for heavy construction equipment and commercial vehicles because they have no other choice. The ongoing shortage of construction labor is behind the problem. Yet, with these individuals comes increased risk.
- They are more likely to suffer an injury and file a workers’ compensation claim.
- These inexperienced workers may not do as good of a job on a project, increasing risks associated with poor construction.
- They are more likely to cause injury or property damage due to inexperience behind the wheel.
That’s why you’re finding heavy construction equipment insurance more expensive to buy. Some companies are even denying access, pushing those higher-risk businesses towards the surplus lines market. There, costs are higher, and coverage may be somewhat limited.
What Can You Do to Get the Coverage You Need, Then?
Construction companies must put more attention on improving risk to qualify for the lowest rates and the best coverage options. To do this, it’s essential to hire the best possible skilled workers. You may pay more for your employee but you get better quality work and save money on insurance. On-site training programs to improve safety can also be beneficial. and keep employees well-trained and in place longer, reducing talent loss. Companies also need to provide as much information as possible to demonstrate financial stability. Businesses must prove they have the ability to manage the risk of maintaining their equipment. Another option to lower your premium is to increase your deductible.
BOTTOMLINE: Construction equipment insurance is available, and the companies with fewer claims and more financial stability are likely to find competitively priced policies. As the industry continues to grow at a robust rate, insuring equipment will continue to be vital. Yet, finding the right level of risk management will continue to be an essential part of the process of running these businesses.