10 Common Construction Insurance Types

Understanding construction insurance types goes beyond just naming policies—you need to align coverage with real job-site risks, costs, and compliance needs. Below, each insurance type comes with a deep dive on coverage, pricing, real-world examples, and why it matters for civil engineering projects.

1. Commercial General Liability (CGL)

What It Covers:

• Bodily injury and property damage to third parties—like clients, suppliers, or visitors.
• Medical payments, defense costs, settlement fees, and even advertising injury (libel, slander).
  

Typical Cost:

• Average annual premium: $500–$1,500 depending on project scope and claims history 
• Contractors often pay ~1–3% of annual revenue.
  

Why You Need It:

• Often a bidding requirement—no CGL, no project access
• Covers lawsuits if someone trips, property car gets damaged, or you cause advertising errors

Example

A passerby trips over a hose you forgot to coil. CGL covers their medical care (broken wrist), your legal fees, and any settlement—or you pay it out-of-pocket.

2. Builders Risk Insurance

What It Covers:

• Insures 'works-in-progress': building structures, scaffolding, materials, equipment on site or in transit 
• Perils include fire, theft, vandalism, wind; flood/quake coverage via endorsement

Typical Cost:

• Runs about 1–5% of total project cost.
  
• Example: a $500,000 build = $5,000–$25,000 premium; ~$80–$450/month for smaller works.

Why You Need It:

• Protects valuable materials and structure before completion
  
• Shields from financial losses due to theft or weather—vital for long or high-value jobs
  

Example

Midway through construction, vandals smash in and steal copper piping. Builders Risk covers both damage repair and piping replacement, potentially saving $20,000.

3. Workers’ Compensation & Employers’ Liability

What It Covers:

• Covers medical costs, rehab, lost wages for on-site injuries
  
• Employers’ Liability addresses lawsuits if injured workers sue beyond comp coverage
  

Typical Cost:

• $5,000–$8,000/year per employee, based on payroll and risk classification
  
• Some pay $45–$75/month; riskier crews (demolition, heights) pay more
  

Why You Need It:

• Legally required across nearly every U.S. state
• Covers serious events like falls or machinery accidents
• Protects against lawsuits stemming from injury-related negligence

Example

An operator strains a back lifting equipment. Workers’ Comp handles treatment and time-off pay; Employers’ Liability covers legal if they sue for future damages.

4. Inland Marine Insurance (Tools & Equipment)

What It Covers:

• Damage, loss, or theft of movable tools and gear—on-site, in transit, or stored

Typical Cost:

• $500–$3,000/year, depending on inventory value

Why You Need It:

• Keeps your tools protected—even in field conditions
• Ensures fast replacements and no work stoppages if something disappears

Example

You leave a new auger on the back of a trailer overnight. It’s stolen. Inland Marine can reimburse its $5,000 value, so the next day isn’t a lost day.

5. Professional Liability (E&O Insurance)

What It Covers:

• Claims from design errors, consulting mistakes, omissions by civil engineers or project managers
  

Typical Cost:

• $800–$2,000/year, or ~$50–$200/month
  

Why You Need It:

• CGL won't cover design faults; E&O fills that gap
• Helps with liability if specs are wrong or delays occur due to oversight

Example

Engineer miscalculates soil compaction needed under a foundation. The structure shifts. PLI covers redesign, repairs, and client claims.

6. Pollution Liability

What It Covers:

• Cleanup, third-party damage, and legal defense from environmental issues like spills or contaminated soil.
  

Typical Cost:

• Varies by hazard risk; often added to OCIP or standalone for high-risk projects
  

Why You Need It:

• CGL policies exclude pollution-related incidents
  
• Contamination events can cost millions, making this crucial for industrial or brownfield jobs
  

Example

A construction crew drills through an old underground tank, causing fuel seepage into groundwater. CPL pays for cleanup and regulatory response.

7. Business Interruption Insurance

What It Covers:

• Loss of profits and fixed expenses during covered interruptions (fire, vandalism, weather)
  

Typical Cost:

• Often bundled with other business policies; cost based on revenue and risk level
  

Why You Need It:

• Features insurance doesn’t pay you directly
  
• Keeps payroll, rent, and loan payments covered during delays
  

Example

Hurricane hits your site, shutting down work for two weeks. Interruption insurance covers your crew payroll and overhead to keep everything running.

8. Surety Bonds (Bid, Performance, Payment)

What It Covers:

• Bid Bonds guarantee you can start a project if awarded
• Performance Bonds ensure completion per contract
• Payment Bonds guarantee sub/supplier payments
  

Typical Cost:

• $100–$10,000+, depending on bond value and creditworthiness
  

Why You Need It:

• Often mandatory for bids—especially public or institutional
• Provides project stakeholders confidence in your delivery and payment capability
  

Example

You bid and win a $1M city contract with a performance bond. If you fail to complete, the bond compensates the city so they can finish work another way.

9. Owner-Controlled Insurance Program (OCIP)

What It Covers:

• A “wrap-up” for CGL, WC, Builders Risk, Pollution, and more—covering all parties under one plan

Why You Need It:

• Simplifies coverage administration
• Often lowers total premiums for large, multi-tiered builds
• COI under OCIP removes individual proof-of-insurance burdens

Example

A hospital construction uses an OCIP—contractors and subs just sign on and work, and all insurance is handled centrally, avoiding gaps or overlaps.

10. Umbrella & Excess Liability

What It Covers:

• Adds extra layers—typically $1M–$10M—beyond CGL and auto coverage

Typical Cost:

• $1,000–$3,000/year for $1M–$5M in limits 
• Fees scale with coverage amounts
  

Why You Need It:

• Provides peace of mind for high-cost claims
• Required or recommended by many commercial clients
  

Example

A heavy machine causes $3M in property damage. Your CGL covers $1M; Umbrella covers the rest—no out-of-pocket loss.

At-a-Glance: Quick Checklist of Construction Insurance

Risk Reduction with FJDynamics Guidance Systems

Investing in the right construction insurance is only half the battle — preventing costly accidents and claims is equally vital. That’s where FJDynamics Guidance Systems come in: they help contractors proactively manage site hazards, reduce human error, and maintain a safer, more productive job site — which can translate directly into lower premiums and fewer insurance headaches.

FJDynamics’ advanced grade control and positioning systems — like the G31 PRO, Easydig G31 Lite, H36 PRO, and H39 PRO — enable operators to excavate and grade with centimeter-level accuracy. This means less accidental over-digging, fewer utility strikes, and minimal disturbance to surrounding structures — all of which are common causes of liability claims and expensive site repairs.

Final Take

Understanding construction insurance types isn’t just compliance—it’s smart business. Tailor your coverage to match project size, risks, and team. Combine this journaled checklist with risk cutting tech like FJDynamics and you’ll run safer, smoother, and more reliably.