What Type of Insurance Do Excavator Contractors Need?

What would you do if your expert excavation company got hit by an unexpected lawsuit?

Would you have $18.8 million lying around to handle it? That’s the average cost of a construction dispute in 2019, and it’s a potentially catastrophic amount if you’re unprepared to cover the costs.

You don’t need an expert to tell you that groundworks projects can lead to worker injury, liability claims, damage to the client’s property, or wear-and-tear on your own equipment.

Specialist drilling, land clearing, excavating, and grading are all risk-heavy, technical services that can lead to damages, injuries, and unplanned costs when they’re not done right.

Plus, excavation work is dangerous by nature. In 2019, 1 in 5 workplace-related deaths happened on a construction site. The average work-related injury cost $42,000 to the employer, while the average workplace death cost $1,220,000.

Every contracting company should know what to prioritize when it comes to business insurance coverage.

How much is excavation contractor insurance?

The exact cost of your excavation contractor insurance policy depends on your business needs and risks. The average price of a $1 million to $2 million general liability policy for excavation contractors ranges from $67 to $99 per month.

The factors affecting your exact premium price include:

– Location
– Size
– Payroll
– Sales
– Experience

Claim scenarios

These are the most common insurance claim scenarios that excavation contractor businesses encounter:

– 1. General liability
Also called commercial general liability or business liability insurance, this coverage protects in the event of claims that your excavation business caused injuries or damages to a third party (either personally or their property).

A person driving past your excavation site could conceivably encounter debris that blew away from the work area—and end up in a crash when they try to dodge it. That could lead to a claim of third-party bodily injury and damages if a court determines that your excavation business is at fault.

– 2. Third-party property damage
You start a new project during a particularly windy week, since your foreman says that postponing it would put the schedule too far behind and he doesn’t believe the wind is severe enough to be hazardous.

As your team is halfway up a tall Ponderosa pine pruning down unhealthy branches, an extension cord throws a spark, and the wind propels the spark in the wrong direction. The pile of brush from the half-maintained Ponderosa catches fire, and the air movement helps the fire spread faster than your team can control it with the emergency kit you keep on-site.

The pine grove burns down, leaving only a few of the most robust trees, and even those are in bad shape. While the fire is still spreading, it reaches a shed on the edge of the property where landscaping equipment is kept, and that burns down too.

The landowner sues your business for the loss of the pine grove and the replacement of the shed and equipment. The financial responsibility is substantial, but your general liability policy covers it as third-party property damage.

– 3. Bodily injury coverage
Third-party bodily injury coverage protects your excavation company in the event of situations where someone gets injured as a direct result of your job operations.

Let’s say that a commuter walks through your job site instead of around it, and one of your excavator operators doesn’t see them passing by. The third party gets hit by an excavator and his medical bills amount to tens of thousands, but bodily injury coverage pays for the cost of the lawsuit and resulting damages.

State requirements

Excavation contractor insurance requirements vary by state. For instance:

Workers compensation is a state requirement in every state where you have W-2 status employees

License bonds and contractors’ licenses must be on file with the state in most cases, and not doing so can result in losing your license

Minimum liability insurance for licensed contractors is a requirement in states including California, Oregon, New Jersey, Arizona, and Washington

Things to consider

Excavator contractor insurance may not always cover certain exclusions, such as:

– Care custody and control
– Tools and equipment
– Employee injuries
– Subcontractors
– Vehicles driven by the owner or employees
– Contractual liability
– Collapse and explosion
– Environmental pollution
– Business closure due to viruses or diseases, including COVID-19

The exclusions depend on your exact policy—you can check the actual insurance policy declaration page for specifics. You may be able to add riders to cover certain exclusions, depending on what your excavation contracting business needs.

Get custom excavation contractor liability insurance

Your personalized quote on excavator contractor liability insurance is waiting—all you have to do is request it.

USA Business Insurance Services offers completely custom insurance policies based on what your business needs. Whether you need general liability, tools coverage, or workers compensation, you’ll pay the best price for your 100% personalized excavation contractor insurance policy.

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