Why Every Building Contractor Should Consider Umbrella Insurance
As a building contractor, you already know the importance of having the right insurance coverage. General liability, workers’ comp, commercial auto—you’ve probably got those bases covered. But there’s one more policy that could protect your business from financial disaster: umbrella insurance.
What Is Umbrella Insurance?
Umbrella insurance is extra liability protection that goes above and beyond your existing business insurance policies. If you face a claim or lawsuit that exceeds the limits of your general liability, commercial auto, or employer’s liability coverage, an umbrella policy helps cover the difference.
In other words, it’s a backup plan when your primary policies hit their limit.
Why Contractors Need It
The construction industry is inherently risky. Property damage, workplace injuries, subcontractor issues, and lawsuits are part of the territory. And with legal settlements and medical costs on the rise, a single claim could exceed your current policy limits—especially if:
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A serious injury occurs on your job site
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A client sues over structural defects or delays
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A third party gets hurt due to your equipment or site conditions
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You’re involved in a major accident with a company vehicle
Without umbrella coverage, your business—and potentially your personal assets—could be on the line.
Real-World Example of Umbrella Insurance in Action
Imagine a scaffolding collapse on one of your sites injures a pedestrian. Your general liability policy covers up to $1 million, but the claim settles for $2.5 million. Without umbrella insurance, you’re responsible for the remaining $1.5 million out of pocket.
An umbrella policy would’ve kicked in to cover the excess—potentially saving your business.
What Does It Cover?
For contractors, umbrella insurance can extend coverage limits on:
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General liability (job site injuries, property damage)
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Commercial auto insurance (vehicle accidents during operations)
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Employer’s liability (employee injury lawsuits not covered by workers’ comp)
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Legal fees related to covered claims
Keep in mind: umbrella insurance doesn’t cover things like poor workmanship or breaches of contract. It’s focused on liability—not professional performance.
What Does It Cost?
The cost depends on the size of your business, number of employees, and the nature of your work, but typically:
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$1 million in coverage starts around $500–$1,500 per year
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Each additional $1 million in coverage comes at a slightly lower rate
Given the potential risk exposure in construction, it’s a small price for substantial peace of mind.
Bottom Line
Construction is unpredictable. One major claim could wipe out your business if your coverage limits aren’t high enough. Umbrella insurance is a smart, cost-effective way to protect what you’ve worked hard to build.
If you’re not sure how much coverage your business really needs, talk to a licensed insurance advisor who understands the construction industry. The right umbrella policy could be the difference between weathering a storm—or being washed away by it.