Excavation can be a dangerous business, with significant hazards including injuries that occur on worksites, property damage caused by your operations, and accidents that occur while driving a company vehicle. Having the right insurance coverage can help your company weather unforeseen circumstances and provide you and your employees with valuable financial support.

What insurance coverage do I need as an excavation contractor?

There are many types of insurance coverage to consider, but these policies are particularly relevant to excavation contractors:

General Liability Insurance

Construction sites can create many hazards for the public, with debris, equipment, and uneven ground often leading to trips and falls. In addition, excavation could damage nearby buildings. This means that excavation businesses are at a higher risk of general liability claims. 

General liability insurance provides coverage for incidents of third-party property damage, bodily injury, personal injury, and advertising injury that could arise in the course of your work. If your business is sued, general liability insurance can cover legal fees, damages, and medical payments in the case of an injury. General liability can also cover non-physical personal and advertising injuries such as libel, slander, or copyright infringement.

General liability insurance also features a products and completed operations component. If someone is injured or property is damaged as a result of your work after it is completed, this aspect of general liability insurance would cover it. Since people may continue to work on a job site after you have completed excavation work, the risk is high for injury or damage.

Excavation companies often rely on backhoes, excavators, and other mobile equipment, so it’s important to be aware of how liability insurance applies to this equipment. Typically, general liability insurance would cover bodily injury or property damage caused by mobile equipment while on a worksite or at your premises. However, incidents that occur while mobile equipment is driven on public roads are usually excluded from general liability coverage. You would need a commercial auto policy to cover accidents that happen on a public road. 

Examples: 

• Bodily injury: Your excavator injures a bystander walking near your construction site. They sue your business for medical expenses and lost wages from being unable to work. General liability would provide coverage.
• Property damage: Your excavation work causes a neighbor’s garden wall to collapse. Your general liability insurance will cover the damages. 
• Completed operations: After you complete work on a construction site, someone tries to take a shortcut through the site and falls into a trench your company dug. Your general liability insurance would cover medical costs and legal fees if the person sues.

Workers’ Compensation Insurance 

Almost every state requires companies with employees to obtain workers’ compensation insurance, and it’s a particularly crucial coverage for companies in the construction industry, as they have a higher rate of injury than other professions. Excavation sites can be dangerous, with risks of landslides, sinkholes, or collapsing retaining walls, and operating heavy machinery and hand tools increases the potential for injuries as well. If your employees are injured or fall ill as a result of their work, workers’ comp will provide funds for medical expenses and a portion of lost income. Workers’ comp also provides financial benefits to surviving dependents if an employee dies in a work-related accident.

Example: 

• A retaining wall collapses on an employee at a worksite, causing numerous broken bones. Your workers’ comp insurance would cover medical bills, rehabilitation costs, and a portion of lost income while the employee is recovering and unable to work.

Commercial Auto Insurance

Excavation contractors rely heavily on vehicles to transport equipment and workers. This means that commercial auto insurance is a key coverage to secure. If one of your employees causes an accident while driving a company vehicle, your commercial auto insurance will pay for any resulting third-party bodily injury, property damage, or pollution cleanup. Commercial auto insurance also covers the value of the vehicle itself if it’s damaged or lost due to collisions, falling objects, theft, or other perils.

Excavation companies often use vehicles such as tractors, bulldozers, excavators, and backhoes, which are typically considered mobile equipment. Liability insurance laws regarding these vehicles can vary by state. In general, if mobile equipment causes bodily injury or property damage on a work site, your general liability insurance would cover the claim. However, many mobile equipment vehicles can be driven on public roads, and general liability insurance policies may exclude coverage for accidents that occur on public roadways. You would need commercial auto insurance for your machinery to cover these situations. Some states legally require you to purchase auto insurance for your mobile machinery. 

Example: 

• While driving a backhoe to a worksite, your employee accidentally misses a stop sign and runs into another vehicle. Your commercial auto insurance would cover the damages. 

Inland Marine Insurance 

Excavation contractors are constantly transporting their equipment and tools from job site to job site. Since commercial property insurance may exclude mobile property, inland marine insurance is an important coverage to consider. Inland marine policies provide financial protection for your business property that does not remain at a fixed location and is not covered by a standard commercial property insurance policy. This could include equipment, tools, supplies, and other items that your business may need to transport to and from worksites or store at client sites.

Example: 

• Vandals break into a job site and damage several of your excavators. Inland marine insurance would pay for repairs. 

Commercial Property Insurance

Commercial property insurance can provide funds to replace or repair your business property if it is destroyed or damaged by a covered peril such as fire, explosion, storm, vandalism, and more. This coverage protects the value of:

• Buildings belonging to or leased by your company
• Contents of the building, including tools, equipment, and inventory
• Property of others while it is under your care, custody, or control

Example: 

• A fire breaks out at your headquarters, resulting in severe damage to your office space and equipment in your storage lot. Commercial property insurance would cover the loss. 

Additional Coverages

• A business owner’s policy combines general liability, property, business income, and extra expense coverage into a single package. For small or midsize excavation companies, this type of insurance could help you obtain a wide range of coverage. Premiums for a business owner’s policy are typically cheaper than the cost of buying each coverage separately.
• Business income coverage will reimburse you for lost income and operating expenses if your business is forced to close due to a covered peril, such as fire, storm damage, or other property damage.
• Pollution liability insurance covers third-party bodily injury, property damage, cleanup costs, and legal defense costs that result from pollutants released by your company. Excavation work could contaminate soil or groundwater in the area. 

Pricing and Quotes

Pricing for excavation contractors insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, an excavation contractor with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for excavation businesses:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Final Word

If your company must deal with an unexpected event, it can be difficult to recover. As an excavation contractor, your work can present dangers no matter how many safety precautions you take, so it’s crucial to be prepared for incidents such as unintentional injuries or accidents. Insurance coverage can provide financial support that will give you, your employees, and your clients peace of mind and help your company continue to operate in these situations.