Contractor Business Insurance increases the chances of survival of small construction businesses. Undoubtedly, the construction industry is one of the highest competition business domains. It is not surprising that most new construction companies exit the industry within the first ten years.
The Bureau of Labor Statistics 2019 report made it clear that the construction industry has the lowest survival rate in the US. Only 35% of construction businesses survive the fifth year after they start their operations. Five years in a high competition industry is a big achievement, but it does not guarantee that your company will make it through the next five years.
According to a recent survey report, insurance protection increases the chances of survival of new construction companies by 30%. Why is that so?
Bureau of Labor Statistics reports show that 75% of small construction businesses fail to survive after the first year and close their operations due to financial vulnerability and poor risk management. However, insurance covers help you in dealing with both of the factors mentioned above.
Credibility of Business
Contractor Business Insurance is a must for small construction businesses that want to beat the market’s unfavorable odds. New construction companies are less trustable; hence they do not get sufficient projects to make their ends meet. As per a ZDNet survey, 85% of American citizens trust companies with a good reputation. Lack of insurance protection can make the majority of your clients suspicious of your operational capabilities and professionalism. To earn your clients’ trust, you need every single benefit for your business, and insurance is one of your supporting factors.
A foolproof Risk Management Strategy
You cannot expect your construction company to succeed unless you have a practical strategy to deal with unforeseeable circumstances. Risk management strategy involves the following steps:
- Risk identification
- Assessment of risk
- Decision making to control or manage risk
- Implementation of controlling tools
- Close monitoring of the implementation of the risk management plan
Insurance is a tool that helps you in controlling the most obvious risks to a new construction business. You never know what risk you are going to face the next day on your construction site.
Contractors Business Insurance Financial Compensation
Insurance is a financial cover that protects construction businesses from the devastating financial setbacks due to work-related accidents. However, you cannot buy a ready-made insurance plan for your construction business. Every construction company needs a unique risk insurance plan according to the needs of their business. The 2019 Willis Tower Watson survey report shows that insurance claims of more than $230 billion were made by the contractors, which is a big figure. These claims were made because construction businesses work in the most volatile environment, and you cannot control uncertainty.
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Despite these 3 benefits of insurance protection, most small contractors either assume insurance as a liability or are unaware of the benefits of insurance.