Construction is a high-risk business.

From Mother Nature’s surprises to fender benders to job site pilfering, losses can hit from every angle.

That's why you got to stay proactive, making sure your business is fully insured and prepared for whatever comes down the pipe. 

But construction insurance claims can be tricky – and if you don’t know how to handle them you may be the one left holding the bag.

Keep reading to learn more about common insurance claims construction companies face and how to overcome the challenges you may run into when filing them.

The Safety Net Your Construction Company Needs: The Flexbase Card

You wouldn’t even think of doing high-rise construction without a safety net. And you shouldn't think about running a construction company without the Flexbase card.

Bold statement? Let us explain.

Traditional cards don't offer the credit limit construction businesses need to be able to cover expenses. Just think about all the equipment you need to run your business. An $8,000 credit limit means nothing to you if you need to purchase a new excavator. 

But with Fexbase you get 10x the credit limit traditional credit cards offer. 

Plus, you get 0% interest for 60 days*. We’re going to guess you never get paid on time. Maybe you’re paid in cycles that don’t align with your payroll – or with the equipment financing you’ve got to stay on top of. With the Flexbase card you’ve got a full 60 days* to float those costs while you’re waiting for more revenue to come in all without having to give up that interest. 

With the Flexase card, it’s all about cash flow. You need it, we deliver.

The Flexbase card hands you:

• 0% interest for 60 days* 
• expense management & receipt tracking built into the app
• Unlimited employee cards
• Spending limits and controls per employee

What Is a Construction Insurance Claim?

A construction insurance claim is a claim another party files against your business due to bodily injury or property damage your business caused as a result of your operations. 

Let’s take a look at six of the most common construction insurance claims examples.

6 Common Construction Insurance Claims

#1: Water Damage

The dreaded water damage. 

Construction insurance claims due to water damage aren’t only common – they can also be crazy expensive.

Here's how you can cut down on water damage claims.

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Water Damage Caused by a Roof Leak

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One of the biggest causes of water damage is a leaky roof. 

This generally happens when a storm rolls in before you’ve had a chance to complete roof repairs or installation. The skies suddenly clear and you’re left with a flooded building.

To avoid water damage insurance claims, construction companies have to be diligent about keeping an eye on the weather. The problem is that even if you're practically a meteorologist, severe weather can pop up out of nowhere. 

That's why it's important to always cover the roof with a tarp anytime you’re away from the job site. 

And while you're at it, be sure to store your tools and other materials out of reach of moisture.

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Incidental Water Damage

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Maybe you're breathing a sigh of relief because you don't work on roofs. But the fact is, you can still be smacked with water damage claims due to incidentals.

Pipes can freeze. 

You may turn the water back in a building back on, but forget to turn the faucets off. 

Or maybe one of your employees accidentally cuts the wrong pipe. 

You can avoid potential construction insurance claims for incidental water damage by:

• Inspecting job sites ahead of time and formulating a risk mitigation plan based on the unique risks at each site.
• Teaching your team to what to look for in potential sources of water damage risk and how to correct them.
• Testing pipes before turning the water on, and double-checking after it's on to make sure nothing is leaking.
• Taking the time to winterize any exposed pipes.
• Making sure your team is aware of the location of pipes before they start cutting or drilling.

#2: Property Damage

No matter how well you cross your t's and dot your i’s, accidents are bound to happen.

And when accidents show up as property damage you can be out a hefty amount of money, for example: 

• Maybe a concrete subcontractor mixes a bad batch of concrete and you wind up with a cracked foundation and structural shift. 
• Or the new guy thinks the company truck is in reverse, only to find out it isn't – after taking out the garage door. 

It’s gonna cost you. 

This is why you don't want to forgo general liability insurance to help cover:

• Damage repairs and replacements
• Missed work time 
• Medical bills
• Attorney’s fees
• Damages and judgments for the person suing you
• Miscellaneous other costs, including court costs

#3: Jobsite Injuries

Accidents happen. 

And when you're in a high-risk industry like construction, chances are you're going to see a far higher number of job site injuries. According to the U.S. Bureau of Labor Statistics there were 174,100 total recordable cases of nonfatal injuries and illnesses in 2020.

Don’t be left holding the bill. 

Be prepared for the worst with general liability insurance and worker’s compensation coverage. These can help protect your business and your hardworking employees by covering important costs, such as: 

• Medical expenses
• Rehabilitation
• Lost wages
• Lawsuits
• Death benefits 
• Funeral expenses

#4: Stolen Equipment

It may be lumber, power tools, or even a vehicle.

These days it’s not a question of ”if” something will be stolen, it’s a matter of “when.”

The equipment you use to run your construction company is a huge asset and without it, your business shuts down. 

That’s why it’s critical you protect yourself in case someone makes off with your construction equipment. 

Tools and equipment coverage can help by taking care of things such as:

• Vandalism
• Theft
• Damage

#5: Company Vehicle Damage

From fender-benders to serious accidents, if your insured work vehicle is involved in a wreck, you'll want to make sure you have commercial auto coverage. 

Commercial auto coverage will help cover your company vehicles in the event of car accidents or damage to company vehicles.

Vehicle policies can include:

• Liability: This provides coverage for when you’re at fault for damage or injuries to another person.
• Comprehensive and collision: This covers damage to your vehicle when you’re at fault.
• Uninsured/underinsured motorists: This covers your injuries and property damage if the other driver is at-fault and underinsured or uninsured. 
• Medical payment: This covers any injuries your passengers might receive.

5 Challenges Construction Companies Face When Filing Insurance Claims

#1: You Must Notify Your Insurance Carrier Immediately

Many “claims-made” policies require you to respond immediately if you want to keep your coverage intact. But sometimes construction companies are afraid their insurance premiums will increase if they notify their carrier – so they delay notification. While rates may occasionally increase, it is generally not the case. 

Some companies make the mistake of delaying notification to their carriers thinking the claim may disappear. But burying your head in the sand is never the answer. 

It’s far better to attack the issue head-on and provide notice sooner rather than later.

As soon as you learn about a potential construction insurance claim, get the facts and notify your broker. They’ll know how to proceed in presenting the claim to your insurance carrier and can advocate for you if needed. 

#2: Submitting Claims Can Be a Hassle

Submitting construction insurance claim forms can be a real pain in the butt.

Can you call your claim in? Does it have to be submitted via email? Or do you have to do it the old-fashioned way, on paper?

If you’ve chosen an insurance provider who still requires claims to be submitted via paper claim forms (rather than auto-submitting them online), you may find your claim taking longer to process and pay out.

#3: Your Claims May Be Denied

Initial construction insurance claims are frequently denied, which leaves you trying to figure out the reason why – and if there is anything you can do about it. 

The reasons insurance companies may be quick to deny commercial claims are varied and may include:

• Claims submitted under the wrong policy
• Mistakes made by the policyholder
• Lack of documentation

Your claim department or broker will act as your advocate and can walk you through a denied claim. 

Don’t be quick to take “no” as an answer when it comes to construction insurance claims. Retain an experienced legal expert who has what it takes to argue your case.

#4: You Can Get Hit With a Reservation of Rights Letter

Once you’ve served timely notice to all parties involved, your insurance carrier will respond in one of three ways:

1. It will agree to cover the claim (don’t hold your breath).
2. It will deny the claim (remember, always be willing to fight your case).
3. It will agree to your defense but reserve the right to deny a claim based on certain grounds and send you a “Reservation of Rights” letter (basically saying they have doubts as to whether your policy covers some or all the claims).

If you receive a Reservation of Rights letter you must respond. But this is something you want a trained attorney to check out, so be sure to hire coverage counsel to review the document. Sometimes, this type of letter includes verbiage saying the carrier will plead your defense in the legal action, but down the road, if your coverage is denied, you’ll be required to reimburse them for your defense.

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After discussing the letter with your counsel, you may reply something like this: “I disagree with your description of my coverage. I reserve all my rights under the policy and under the law. “

Then be prepared to argue your case.

#5: It Can Take Time To Receive Compensation

Receiving compensation can take time, even if your insurance company instantly agrees to cover a claim (which is highly improbable).

Depending on the circumstances it may take weeks, or even months to receive your compensation. (Can you say, “Cash flow problems”?)

You have stolen equipment that needs to be replaced. Equipment financing still has to be paid. And then there’s the issue of payroll. 

You need funds ASAP. The Flexbase card can help.

Navigate Construction Insurance Claims With the Flexbase Card

The Flexbase card can help provide construction companies like yours with some capital to help float costs while you’re waiting for compensation from construction insurance claims.

Credit card limits of traditional costs don’t meet the needs of construction companies. But unlike many traditional credit cards that limit your credit, the Flexbase card gives you 10x the credit limit. 

Plus, you get  0% interest for 60 days* and 0 annual fees as an added perk. When your transaction is paid in full within 60 days*, you don’t pay a dime in interest. That’s a huge saving compared to the traditional loan route.

Click below to get preapproved today.