Adequate insurance for tradesmen is vital because the building trades industry is one of the riskiest fields of all occupations. OSHA reports that 5,333 workers in building trades died while on the job in 2019, which equates to one in five workers annually.
As risky as the building career field is, skilled contractors are in demand for commercial and residential properties countrywide.
A broad range of terms fall under the umbrella of tradesmen, but for our purposes, we will focus on skilled construction trades such as electrical contractors, heating and air conditioning (HVAC) contractors, excavators, road pavers, carpenters, plumbing contractors, landscapers, and interior painting contractors.
We will explain the kinds of risks that occur in the building trades industry and the types of commercial insurance policies that cover them. Moreover, we will inspire you to pursue a specialization in insurance for tradesmen by highlighting the benefits of selling to this target population.
Why Specialize in Insurance for Tradesmen?
With the pandemic creating havoc in all industries, disruption seems to be the word of the year. As the winds of change blow, disruption can be your best friend, as it opens up new markets for you to build your book of business.
For example, the pandemic led to The Great Resignation, where 4.5 million workers quit their jobs as of November 2021. Rather than deal with the uncertainty of their current jobs, many tradesmen opted to cash in on the gig economy or make the move to self-employment.
While restaurants and entertainment companies are struggling due to social distancing guidelines, the building trades are still booming since tradesmen often work outdoors. This is one reason why building trades are a lucrative area to focus your marketing dollars and efforts on.
How great is the potential for insurance tradesmen? Research shows some skilled trades are having double or triple-digit growth. Another source projects there will be over three million openings in skilled trades by 2028. As the electric vehicle market begins to take shape, the electrical contractor market will experience a high rate of growth, making insurance for tradesmen a lucrative market.
Insurance agents who specialize in insurance for tradesmen have an opportunity to build a “recession-proof” book of business that will supply commissions in good times and bad times. Even during poor economic times, there is always a demand for highly skilled contractors.
Moreover, taking on a specialty like insurance for tradesmen will also help you differentiate your agency from other agencies that do not serve the building trades market.
Keep in mind that tradesmen are intrinsically connected to one another through job sites, which will lead to a natural flow of referrals.
Finally, while tradesmen are experts at their individual crafts, their businesses rely on insurance experts who can counsel and advise them on how to protect their businesses and livelihood.
What Kinds of Risks Does Insurance for Tradesmen Cover?
Each area of specialty within the building trades carries its own set of risks.
Carpenters and roofers risk falling and getting injuries from their tools. Electricians can get shocked or injured due to a fire or explosion. Plumbers risk injuries due to working in confined spaces or from exposure to asbestos. Excavation risks encompass hitting underground utilities, soil contamination, and heavy equipment usage. The list goes on and on.
In general, tradesmen are also at risk of back problems and injuries due to repetitive movements. They are sometimes subject to working in extreme heat or sub-zero temperatures. Depending on the job site, they may also be exposed to solvents, lead paint, or other toxic chemicals.
While these risks relate to workers, building tradesmen also face risks in connection with their job site. Risks abound on a construction site, whether the crew is building a single-story residential dwelling, an underground tunnel, or a city skyscraper.
On the management side of things, managers in the trades also face financial, operational, and contractual risks such as:
- Poorly written contracts
- Change orders
- Supply chain issues
- Unexpected site conditions
- Property damage
- Theft
- Labor shortages
- Natural disasters
- Issues with subcontractors
As an agent for insurance for tradesmen, you have an opportunity to assist tradesmen in identifying risks and safety hazards, and providing them with insurance to mitigate common risks. As your relationship strengthens, tradesmen will rely on your insurance expertise to control and monitor risks on an ongoing basis.
What Types of Commercial Insurance Do Tradesmen Need?
It pays to familiarize yourself with the unique risks associated with various skilled trades, so you can ensure you are recommending the most appropriate coverages.
The size of the company also plays a role in recommending the right coverages for the business. Your prospects will likely range from a self-employed contractor such as a building inspector to a large construction company with thousands of tradesmen, dozens of company vehicles, large equipment, and numerous building sites. Larger companies and riskier projects may call for higher limits and higher umbrella limits as well.
Most companies will require a mix of insurance coverages including the following:
- General liability
- Commercial property
- Commercial auto
- Inland marine
- Contractor’s pollution
- Employment practices liability
- Workers’ compensation
- Commercial umbrella
- Cyber liability
- Crime liability
- Auto pollution
Building contractors often have contracts with their customers, other contractors, or subcontractors. Contractors are commonly required to sign contracts that include specific insurance requirements before they can get a job started or get paid for their work. One of the more common requirements is providing proof of surety bonds within a designated amount.
Beyond that, contractors must comply with all state regulations on licensing and building codes. For example, in most states, contractors who hire workers must provide workers’ compensation insurance. State auto insurance laws may require tradesmen to carry a commercial auto liability policy that carries certain minimum limits. In certain states, licensed tradesmen must purchase insurance for tradesmen to maintain their licenses with the state.
Final Thoughts
Finding the right insurance for your clients can be a challenge. NIP Group provides comprehensive, industry-tailored coverage to keep your clients focused on what matters most – managing their business.
With over 30+ years of experience insuring professionals and contractors, NIP has the expertise you need to navigate the complex risks associated with building trades. We take pride in expert claims handling, risk control guidance, and proper valuation of property and equipment, and as always, we keep the security of our clients top of mind. Contact NIP Group to learn more at 866-780-8076.
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