Excavation contractors are business owners and are regarded as subcontractors because their task is often just one part of a much larger project. A homeowner can contact an excavation contractor for a private job, such as digging for a swimming pool, but the excavation contractor won’t manage the entire project. Excavation contractors often work under the guidance of general contractors, who obtain bids, organize subcontractor timelines and pay the excavation contractor when he wraps up his part of the project.
If it has to do with moving earth, an excavation contractor is almost certainly the guy to do it. Depending on the equipment the contractor owns or leases, he can build roads, grade roads, dig ponds and sewers, excavate ditches for water lines or gas lines and operate trenchers that install flexible pipes below the ground without making ditches. Excavation contractors create terraced drainage on agricultural land and build earthen dams.
There are considerable risks to mitigate while operating as an excavation contractor and it will require a package of insurance products to properly insulate the contractor from lawsuits. Employees are also at risk because of hazardous tools and equipment typically used at the job site.
Every excavation contract needs general liability coverage to satisfy state licensing requires and have sufficient limits to provide financial protection in the event of a lawsuit from a third party. The general liability coverage will also take care of defense costs which can contribute significant expenses to a claim. Contractors that install products should also ask for the Products, Completed Operations coverage as well.
Most state licensing boards are adamant that all contractors be responsible for job-related injuries and illnesses to their employees. As such, a workers’ compensation policy not only takes care of injury and illness expenses for your employees, it also prevents your employees from suing your business in the event of a work-related injury or illness. There are typically significant penalties and fines for not having workers’ compensation insurance if you employ at least one individual.
According to California’s Business and Professions Code Section 7071.6, “a Contractor’s Bond must be in place before CSLB can issue an active license, reactivate an inactive license, or renew an active license. The bond is filed for the benefit of consumers who may be damaged as a result of defective construction or other license law violations, and for the benefit of employees who have not been paid wages that are due to them.” There are typically other bonds such as a bid bond, payment bond, and performance bond that most contractors will have to deal with, especially on larger projects.
Typically, all excavation contractors will use light and heavy vehicles in the course of doing business, all of which can present significant risks for the business. These vehicles should be insured under a commercial auto policy so that your business can opt for higher liability limits to financially protect your business in the event of an accident.
Most hand and power tools and other special equipment used by excavation contractors are heavy duty and expensive. Having Tool & Equipment insurance from Fairbanks Insurance Brokers will provide financial protection in the event your tools are damaged by a covered peril or go missing.