Is demolition insurance worth adding to your contractor policy

[MikePhua]

Demolition insurance is often required for bidding and compliance
Contractors entering the demolition sector frequently encounter insurance barriers that prevent them from bidding on jobs. Standard operating insurance typically covers excavation, grading, and general construction, but demolition—especially structural or selective interior demo—requires a separate rider or policy extension. Without this coverage, many contractors are excluded from municipal or commercial bid lists, regardless of experience or equipment.
What demolition insurance covers
Demolition insurance is designed to protect against the unique risks associated with tearing down structures. Coverage typically includes:

• Third-party property damage from falling debris or vibration
  
• Worker injury due to unstable materials or hazardous exposure
  
• Environmental liability for asbestos, lead, or contaminated soil
  
• Equipment damage from collapse or impact
  
• Site restoration obligations if demolition affects adjacent parcels
  

Policies may be structured as standalone demolition coverage or as an endorsement to a general liability policy. Some insurers offer per-project coverage, which is useful for contractors who only take occasional demo jobs.
Cost factors and underwriting considerations
Premiums for demolition insurance vary widely based on:

• Type of demolition: Full structural demo costs more than interior strip-outs
  
• Location: Urban sites with adjacent buildings carry higher risk
  
• Experience: Contractors with a clean safety record and prior demo jobs receive better rates
  
• Equipment: Use of high-reach excavators or specialized attachments may affect premiums
  
• Subcontracting: Policies may require proof of insurance from all subs
  

Typical annual premiums range from $5,000 to $25,000, with per-project options starting around $1,500. Deductibles and coverage limits should be tailored to job size and client requirements.
Per-job coverage and flexibility
For small contractors or those testing the demolition market, per-job coverage offers flexibility. These short-term policies are activated for specific projects and expire upon completion. They are ideal for:

• One-off interior demo jobs
  
• Selective wall or roof removal
  
• Small-scale residential teardown
  

However, per-job policies may have higher administrative costs and limited coverage compared to annual plans. Contractors should verify that the policy meets local permit requirements and client specifications.
Industry anecdotes and lessons learned
One contractor in Ohio lost a $60,000 bid opportunity because his policy lacked demolition coverage. After adding a rider for $3,200 annually, he secured three demo jobs within six months, easily offsetting the cost. Another operator in Texas found that his insurer would not cover demolition unless he completed a safety certification and submitted a site-specific risk plan.
In 2022, a demolition firm in New Jersey faced a $1.2 million claim after a partial collapse damaged a neighboring building. Their policy covered the incident, but only because they had a high-limit demolition endorsement in place.
Recommendations for contractors entering demo work

• Contact your insurer and request a quote for demolition coverage
  
• Ask whether per-job or annual coverage is more cost-effective
  
• Review local permit requirements and client insurance demands
  
• Document safety procedures and equipment specs to support underwriting
  
• Consider bundling demolition with environmental liability if working on older structures
  

Conclusion
Demolition insurance is not just a formality—it’s a gateway to new business and a shield against high-risk exposure. Contractors who plan to bid on demo work should proactively add coverage, even if only on a per-job basis. With proper planning and documentation, the cost is manageable and the benefits substantial.