It is amazing to watch a construction crew begin with nothing but a stretch of land and create a beautiful commercial or residential structure on it. Before any construction begins, the excavators are hard at work preparing the land for a sturdy foundation. Construction sites do not look very exciting until the building begins, so it is common for the work of excavators to go unnoticed by passersby and insurance brokers. As part of the building trades, excavating is a high- risk business, and excavation insurance is necessary to mitigate risks.
While insurance brokers and agents focus heavily on other industries, the market for excavation insurance is a profitable and overlooked niche of the business. We will outline why pursuing the excavation market can be a lucrative opportunity for your book of business.
The Need For Construction and Excavation Insurance Is Thriving Despite the Impact of COVID
No industry was untouched by the effects of COVID, yet the excavation and construction industries have been more resilient than most other fields.
Much like other industries, the construction industry has faced shortages of materials due to supply issues, causing somewhat of a slowdown on the excavation end. Nonetheless, the building trades have adapted their working conditions, the supply chain is moving again, and excavators are still in demand.
Excavators do not have the option of working remotely, but they have the benefit of working outdoors. A single operator drives a machine, so social distancing is a non-issue. Heavy equipment operators are also accustomed to wearing masks on the job to protect them from toxins and dust.
The recent switch to a remote workforce in other industries has created a boom in residential construction. As large numbers of workers no longer need to work in city offices, significant numbers of them have opted to relocate to urban areas where the cost of living is lower. This change has slowed construction down in cities. At the same time, it has created a big surge in residential construction in the outlying areas of cities.
The proof is in the numbers, and according to Associated Builders and Contractors, unemployment rates for contractors are on the decline. Moreover, they believe new spending on the nation’s infrastructure could boost the excavation industry even more, looking as far into the future as 2026.
The Excavation Industry Offers a Broad Market Share for Excavation Insurance
Insurance professionals need to learn more about the excavation industry and the associated risks to be successful in going after the excavation market.
What do excavators do? Different construction projects require different types of excavating or grading work.
For example, some excavators solely work on bridge excavations for arch, beam, or suspension bridges which require a strong foundation. Other excavators dig channels or drainage ditches, and some dredge or strip land.
Excavating does not always entail digging. Borrow excavation requires equipment operators to add soil, sand, or gravel onto a building site to prepare the land for construction.
These are some of the other terms insurance brokers and agents should be familiar with when building a book of excavation insurance:
- Foundation excavation
- Land grading
- Roadway excavation
- Muck work
- Levee construction
- Soil erosion
- Foundation drilling
- Shaft drilling
- Underground excavation
Excavating companies may specialize in one type of excavating or they may contract for several different types of excavation. Regardless of what type of excavation a company performs, risks are present, and excavation insurance protects their interests.
What Does Recent Research Show About the Excavation Industry?
Growth in the construction industry is continuing to promote innovation within the excavation industry, along with a greater focus on environmental, social, and corporate governance (ESG) nationally.
Between the years of 2016-2021, the excavation industry rose 4.4%, which amounts to $80.2 billion. That figure accounts for a slight decline in the months following the outbreak of COVID.
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development report an increase in residential construction building permits, housing starts, and housing completions since 2019, and the trend is continuing upward in all areas of the country.
The demand for excavation services for residential construction has been up for the last five years. Moreover, the values of residential housing have also risen since the onset of the pandemic, contributing to the rise in the residential construction market.
Excavating, digging, and trenching are required for many green innovations such as solar panels, wind turbines, deforestation, water management, and sourcing raw materials. Investors are particularly seeking out businesses vested in ESG initiatives, and these issues are increasing the demand for workers in the excavation industry.
Making the Case for Excavation Insurance
Excavating companies are acutely aware of the dangerous risks that are inherent on job sites. For that reason, the excavation industry presents an audience eager to learn more about excavation insurance.
Excavators move the earth every day. There is no way to know what dangers lie beneath the surface. The ground may not be properly compacted or the grading for water runoff could be misaligned. Trenches could collapse or heavy equipment could rupture utility lines. No matter what dangerous incidents occur, excavating business owners are on the hook for injuries, fatalities, and property damage.
Here is a brief look at the types of excavation insurance to recommend for excavators.
Commercial General Liability
A commercial general liability policy for excavators will protect excavators from claims involving bodily injury and property damage. In your discussions with excavating companies, you can build your case by sharing some of the common situations that occur on excavation sites that can cause risks with potential clients.
For example, if one of their employees fails to secure a worksite before leaving the site for several days, someone could wander onto the site, fall into a trench, and be severely injured. Emergency services may be required to get the individual out of the trench.
In this situation, the injured party could sue the excavation company and possibly be awarded a large sum for bodily injury.
As an example of a property damage claim, you could relay a scenario where a heavy equipment operator is grading the land. While excavating, the ground begins vibrating and the vibrations are being felt in a nearby residential subdivision. A property owner in that subdivision has one of their cars parked on a driveway with an incline and did not apply the emergency brake. The vibrations from the excavation caused the car to roll into the street and hit a neighbor’s car. The excavation company would be responsible for the loss and excavation insurance would cover it.
Commercial property insurance would cover damage to the heavy equipment if it should get damaged due to a covered loss. This is important coverage for excavators as failed equipment could force a shutdown of a job site.
NIP Group’s teams have the necessary expertise to help excavation companies properly value equipment, operations, and property to ensure the proper amount of excavation insurance.
Advertising Injury Liability
Advertising injury occurs in all industries, especially with the massive number of people who use social media platforms every day.
Advertising injury is a result of libel or slander that injures someone else’s reputation or another business’ reputation. Often, all it takes is for an employee to joke publicly about a competitor of the company on a social media platform. The injured person could file a lawsuit against the company even if the owner was not aware the incident occurred.
An excavating company could also be accused of stealing a competitor’s idea, and that would also fall under an advertising injury claim.
Furthermore, if one of the excavating company’s ad campaigns directly points to a competitor and they lose business because of it, that could also cause an advertising injury claim. Excavation insurance would pay for the loss of the competitor’s business.
Due to the high risks and large dollar amount of claims, a general liability policy is often not enough coverage for excavators. Build your book of business by offering excess liability for excavators as a second line of defense to protect your clients against liability that could destroy their business.
The grading and excavation industry is a dangerous sector, and business owners are subject to large risks and liability.
All the signs indicate the excavation industry is a ripe market for excavation insurance. NIP Group specializes in site preparation insurance coverage that caters to graders and excavators. Our team is knowledgeable in risk control, claims management, compliance, and safety resources for excavation companies.
Contact one of our excavation insurance specialists today at 866-219-4804 to learn more about how to effectively market to grading and excavation companies.