by Marie King
Most contractors have both general liability and builders risk insurance. A number of contractors don’t know which insurance to file claims against because they perceive both insurances as having similar coverage. General liability has third party coverage while builders risk insurance has first party coverage.
Builder’s risk is a first party insurance. It covers you when you’re not at fault, and this incident is accidental. A builders’s risk policy can be written to include the owner and subcontractors. It usually extends coverage to materials, equipment, contractors’ work, and supplies. It is a property policy, which means the payout for the incident goes to you or the owner of the property.
General liability has third party coverage. It’s covers you in the event that you cause bodily injury, property damage, personal injury or advertising injury to a third party like a client when the claim is based on your negligence. What that means is general liability does cover you when the incident was your fault.
For example, if you’re a roofer and a package of shingles falls off the roof, and your client sustains bodily harm or property damage due to your negligence; your general liability will cover the cost of that injury or damage. Likewise, if you slander or plagiarize a competitor’s advertising, your personal or advertising injury will pick up the cost because you’re at fault.
Builder’s Risk Insurance often is your primary insurance while general liability will be considered your “other insurance”. If builder’s risk is your primary insurance and general liability is classified as “other insurance”. That means your builder’s risk must be the policy that you file your claim with first. General liability will be the “other insurance”, and it will payout for charges in the excess of the builder’s risk policy.
There are a number of reasons to file claims against builders risk insurance rather than general liability:
To understand your builders risk insurance, you need to read your policy carefully and find out what is included in your policy; and what is excluded.You also need to find out from the “other insurance” clause what kind of coverage your general liability offers after your builder’s risk has reached its limit.