When you’re buying contractors insurance, you need to be comparing insurance companies..A big part of this comparison consists of understanding what features are offered in a policy. Recently, ContractorsInsurance.biz published an article on the deadly sins of buying contractors general liability insurance. Five of the deadly sins are the following: “Choosing the Wrong Agent or Broker, Occurence vs. Claims Made, Insurance Company Rating, Exclusions and Subcontractors…”
Agents and Brokers
When you’re researching insurance companies, it’s important to pick one that specializes in the construction industry. That means your agent or broker will be able to point out what features the policy has and any riders or extra coverage you need. You’ll want an agent that will be there to answer any questions that you have and be there to support you when you file a claim.
Occurence vs. Claims Made
When you’re distinguishing between which of the insurance companies that you’re considering, it’s important to understand what kind of policy you’re being offered occurance or claims made. There a big difference between them. ContractorsInsurance.biz explains them in this way:
“First let me describe what triggers coverage in the kind of policies you are used to buying. Contractors have traditionally been insured under what we in the insurance industry call an occurrence policy. The coverage is triggered when an “occurrence” happens during the policy period. Sounds simple and is to a point. An example would be you a contractor is working on a building and damages it. If you have coverage, the company will pay the claim whenever the claim is brought even if the claim is not brought until years later…”
“A Claims Made policy has a different coverage trigger. Coverage is triggered when the Claim is officially made; most often a formal request for payment for damages or a lawsuit is actually made to the insurance company or the contractor, or when you report an incident to the company. Sounds simple, it’s not. The Claim must be brought during one of three different time frames.
Insurance companies are rated by A.M., Best Company and Standard Poor. The insurance companies are graded as an ABCDEF. Any rating below a “B’ is seen as unacceptable. A less than “B” rating can prevent you from getting bids, being hired as a subcontractor or being limited by your local or state government on jobs you can take.
Exclusions vary between different insurance companies. Many times you don’t know that an item is excluded until you.ve filed a claim, You want to know beforehand what the exclusions are and if the exclusions are items that you need to have to ensure that you’re getting the coverage that you desire.
When you investigate differences between insurance companies, make sure that you ask the agent for tips on how to examine your subcontractors’ documents. The agent will probably suggest that your subcontractors should have a certificate of insurance, check that the coverage is current, find out what the insurance company rating is and whether the subcontractor has the same liability limit as you do.