As an excavator, you likely already realize that you face above-average liability risks every time you set out to work on a project. After all, you’re literally moving earth, and any number of things can go wrong. There may be conditions below the surface that you may not have expected, the soil may not be properly compacted, and grading for the water runoff may not be optimal. A trench could collapse, an underground utility can rupture, and a host of other things that could happen. That’s why it’s wise to make sure your excavation business has a general liability insurance policy created with excavators in mind.
What is General Liability Insurance, and What Does it Cover?
A general liability insurance policy offers protection for your excavation company and covers small business liability risks that are unique to your business. General liability protects the financial integrity of your excavation business from various types of third-party claims, including:
- Bodily injury claims
- Personal injury claims
- Property damage claims
- Advertising injury claims
General liability insurance will pay for medical payments and damages related to these types of claims when it can be proven that they’re a result of your business’s operations. General liability insurance pays for covered amounts allotted within the limits you predetermine if someone files a lawsuit against your excavation business.
Ultimately, general liability insurance allows you to run your business without the added concern that you could be sued for injuries or damages that you might otherwise be unable to pay for.
What Types of Businesses Need Excavators General Liability Coverage?
Excavators can potentially perform numerous types of excavation or grading work for different types of construction projects. Some excavation companies specialize in a particular area, while others focus on several types of excavation.
General liability insurance is available for nearly all types of excavation businesses, including those who perform:
- General excavation work
- Land grading
- Foundation digging
- Bridge excavation
- Drainage excavation
- Roadway excavation
- Muck work
- Underground excavation
- Levee construction
- Soil erosion projects and much more!
Why Do Excavators Need General Liability Insurance?
The equipment used in excavation work is heavy, sophisticated, and quite frankly, dangerous.
In fact, according to EHS, an environmental, health, and safety insights organization, excavators have a 112% higher fatality rate than other types of construction contractors. That’s not even considering the general liability issues that occur every day at worksites.
Another thing to consider is that excavation businesses often work with other types of contractors on construction projects. So, if a trench collapses, a worker falls into a trench, a load falls onto a worker, a toxic gas causes illness, or equipment malfunctions or is used in error, it can result in one of your employees or another contractor’s worker getting injured.
If it’s a worker who works directly for someone else and an accident is caused by your company, they could opt to file a personal injury claim against your excavation company. Similar lawsuits have previously awarded millions of dollars to injured parties. The advantage of having general liability coverage with adequate limits is that it would pay for those unexpected claims.
Imagine where your company would stand if this happened to your excavation business and you didn’t have general liability insurance. How would you pay for any exorbitant amounts awarded by a court?
Chances are, your business would go bankrupt, and all your years of hard work would be erased.
Examples Where Excavation Liability Insurance Would Benefit Your Business
Bodily Injury Liability Claims
Suppose one of your excavation workers fails to secure the worksite before taking a break for the long weekend. In the meantime, a curious third-party passerby decides to explore the site and falls into a trench, injuring themselves and breaking a leg.
Even though signs warned against entering the site, the person decides to sue your excavation company. Numerous suits with similar circumstances have resulted in a plaintiff being awarded money for bodily injury claims.
Property Damage Liability Claims
When doing excavation work, the heavy equipment used by your company causes the ground to move. Therefore, the ground near where you’re doing the work becomes less compact. It also creates vibrations that nearby structures can be sensitive to.
Property damage liability claims cover someone else’s property, be it a home, structure, building, or vehicle. It won’t cover your business’s property; that’s what commercial property coverage is for.
Here’s an example of a general liability property damage claim: Let’s say your heavy backhoe equipment disturbs the soil to such a degree and vibrates so intensely that a landowner’s vehicle is suddenly positioned in a decline. The vehicle doesn’t have an emergency brake on, so it rolls towards the home, hitting it and causing one side to collapse.
The property owner sues and wins their case in court. The property damage portion of a general liability insurance policy would pay for covered amounts within the limits set on the policy. Otherwise, your excavation business would have to come up with enough money to pay for the damages.
Advertising Injury Liability Claims
Few business owners, particularly excavation contractors, give much thought to advertising injury claims. It’s something most excavators think will never happen to them. Unfortunately, these types of claims are more common than you know.
First, let’s talk about what constitutes an advertising injury claim. Advertising injuries typically involve some form of libel or slander. Each of these types of injuries damages another business’s reputation. Libel is usually carried out through a written method, such as a sign or a post on a social media platform. Slander is typically spoken.
When libel or slander occurs, few businesses mean any harm. Most of the time, someone doesn’t even realize they’ve done something wrong. For instance, one of your employees might joke about the competition on their social media page. But, since an employee represents your business, it can get your business in trouble if it’s seen by the right (or wrong) person, who then takes offense and decides to make an issue out of it.
Another type of advertising injury is that your business could be accused of stealing an idea from the competition. An easy way that can happen is to suppose you have a new hire who just happened to work for the competition. The new hire heard his ex-boss talking about offering something new at his excavation business. The new hire wants to impress you and tells you he has an idea. Only it’s a similar concept that the other company was planning to embark on. The other excavation company might decide to sue your business for stealing their idea.
Or, let’s say you’re working with an advertising agency that decides to have a little fun with the competition. The ad campaign sends a lot more business your way while taking business away from your competitor. It’s possible the other company could sue yours to compensate them for lost business due to your advertising practices.
Excavators Insurance FAQ
How much will general liability insurance for my excavation business cost?
There’s no preset cost for general liability insurance as many factors influence how much it will cost your business.
For one, the industry itself is a factor, and excavation businesses tend to have more general liability claims than the average business. But, premiums are still affordable, especially when you consider what liability coverage offers your business.
When choosing a policy, bear in mind that the higher your deductible, the lower your premium will be. The reverse also holds true — if you have a low deductible, your premium is likely to be higher.
Other factors at play are the number of years you’ve been in business, your excavation business’s accident history, the number of workers you employ, and even the state you operate your business from.
If you’ve been in business longer or have a clean slate of operations, your premium is likely to be lower than a new business or one that has had more than a couple of accidents in recent history.
Will general liability insurance cover my workers if they are hurt on the job?
Unfortunately, no. Coverage for workers that are hurt while working for you falls under workers’ compensation insurance.
Under workers’ comp coverage, an employee can receive benefits for medical care if they’re injured due to an accident or fall ill due to an environmental exposure while working.
Workers’ compensation will also reimburse your workers for lost wages while they’re recovering. It’s possible that you could bundle the various types of business insurance that are vital to offering more comprehensive protection for your company. In that case, you’ll likely receive a reduced price on your premiums.
Are there other types of commercial insurance that excavators need?
Most likely. General liability insurance is probably the most important coverage your business needs.
But what other insurance coverage you need depends on the specifics of your particular excavation business. At a minimum, your business will likely need commercial auto insurance and some form of commercial property insurance, in addition to general liability and workers’ comp coverage.
When moving your tools and equipment from one job to another, you need protection for the inventory owned by your business. Also, your personal auto insurance won’t cover vehicles used to transport your equipment.
If your excavation business doesn’t have a commercial location to do business from or to store equipment, an inland marine policy might benefit you more than a commercial property insurance policy. Then again, you may need both, depending on the dynamics of your business.
The best thing you can do is consult with a specialized insurer like NIP Group, who’s familiar with the excavation industry. They can help you identify your areas of risk and where you need coverage the most. In most cases, they can offer you comprehensive bundled coverage that will protect you in almost any eventuality.
Is it a legal requirement that my company has general liability insurance?
Individual states determine whether or not you’re required to have general liability insurance to operate. But, there are a couple of other things to consider.
First, most clients won’t hire an excavation company that doesn’t have liability coverage. So if you bid on a job, and it comes down to you or another company, the client will likely choose one that’s insured.
Second, the chances are that your excavation business will work side-by-side with other contractors. You may even get a contract with a government entity. In those cases, it will often be a requirement that you have general liability insurance to proceed with the work.
But, perhaps of even greater importance, you need adequate protection for your business to help it stay financially afloat if something goes wrong. It could be financially devastating if you don’t have coverage and someone sues your company and is awarded a significant amount of money.
Running an excavation business is challenging all on its own. There are typical concerns with operating your business, and the last thing you want is to be preoccupied with a potential financial loss that could interrupt your business.
Still, unexpected and unforeseen things happen when you work in an industry with a higher prevalence of accidents and exposures.
The good thing is that there are ways to help you manage those risks, including targeted insurance solutions for your business.
When general liability claims threaten to disrupt your business, excavators insurance is vital in offering the protection you need to thrive and survive. It can indeed mean the difference between a single loss bankrupting your business and putting it out of commission or continuing to do business without any interruption and with minimal financial loss to you.