Utah Contractor Practice Exam

When putting together a basic insurance package for a construction company, which type of insurance would not typically be included?

1. Property insurance

2. Liability insurance

3. Umbrella policy

4. Workers' compensation policy

The correct answer is: Umbrella policy

In a basic insurance package for a construction company, an umbrella policy is typically not included as a standard component. While many construction companies may include property insurance, liability insurance, and workers' compensation insurance in their basic packages to cover essential risks associated with their operations, an umbrella policy serves a different purpose. An umbrella policy provides additional liability coverage beyond the limits of the underlying policies (like general liability or auto liability). It is designed to protect against catastrophic events or claims that exceed the coverage limits of primary policies. Given its supplemental nature, the umbrella policy is usually considered an optional add-on rather than a basic requirement in an initial insurance package. In contrast, property insurance guards against damage to the physical assets of the company, liability insurance covers legal liabilities arising from injuries or damages caused during business operations, and workers' compensation is essential for providing coverage for employee injuries. These three types of insurance address the core risks that construction businesses face on a daily basis, making them foundational elements of a comprehensive insurance strategy.