Why it’s Necessary to Purchase Contractors Insurance for Contracting Operations

Oct. 7, 2010 - PRLog -- Routine contracting jobs could become disasters when something goes wrong. Bodily Injury and/or Property Damage can occur without warning.  A ladder could blow over and injure someone or damage property, but often it’s the more severe, unforeseen problems that eventually cause the most devastation.

According to a veteran insurance Broker, “What’s more likely is a problem occurring long after the project is completed. Water intrusion could damage the ceiling, or more. This would normally be covered in the Products and Completed Operations section of the policy.” He goes on to add, “Defective roof claims on General Liability policies are much more prevalent in Condominium, HOA and Tract Home work than in any other type of construction.” This from an experienced Broker who’s been on the receiving end of many phone calls from distraught Contractors wanting to initiate a claim.

These are the kinds of incidents that would shake anyone’s confidence, but choosing the right protection in the form of Contractor Insurance goes a long way in providing peace of mind for the Contractor.

The insurer is obligated in a General Liability policy to pay the legal and defense costs of a covered liability lawsuit or claim. The insurance company would also pay any compensatory or general damages the covered contracting business is legally bound to pay. General Liability insurance policies exclude punitive damages, as they’re considered punishment for intentional acts.

These policies declare a maximum cap the insurer will pay during the policy period. Typically a policy will also declare the maximum amount the insurer will pay per “occurrence.” For example, if a company has a $1 million “occurrence” cap in their :Liability policy and are successfully sued for $1.3 million dollars, the insurance carrier would pay $1 million and the business would be responsible for the additional $300,000.  To cover these types of gaps, a company may be able to purchase an Umbrella policy which would cover payments in excess of the underlying policy or policies beneath it.

Premiums for General Liability Insurance policies vary greatly, and an experienced commercial insurance Broker will know what questions to ask to determine where best to place the business. Factors like the kind of work the Contractor does, number of full-time and part-time employees, the amount of work done by subcontractors, the amount of coverage requested, are all considered. They’ll need to know how much payroll is paid and for what type of work. The amount of money paid to subcontractors, the percentage of commercial versus residential work performed, and whether the work is on new or existing structures. Of course claims history comes into play as well.

Commercial insurance is very competitive, and a Broker who has working relationships with several insurance carriers is more likely to find a better deal for a Contractor than an insurance agent who has one company to place business with. Also, a Broker works on behalf of the person seeking Contractor Insurance, whereas a “captive agent,” an agent who has a contractual relationship with an insurance company, works on behalf of that company.

Though not all Contractor Liability insurance policies cover all situations, having an appropriate Contractors insurance policy can be very exciting for a working Contractor, knowing that they are covered with the right Contractor liability. For more information login at www.contractors1stinsurance.com