Wednesday, August 6, 2008
Contractors Insurance: What kind and how much should you have?
Many contractors learn their trade while working for another experienced contractor. Eventually, having gained a good working knowledge of the trade they are ready to tackle the American Dream and venture into entrepreneurship. While the boss had a vested interest in turning the student into a skilled professional of his trade, he rarely had an opportunity to do any business training off of the job site. One often-overlooked aspect of this on the job training is how to get started. New York State does not require that contractors be licensed in their field. Proper insurance coverage is really all that is needed in order to go out and solicit business. Listed here you will find the most common insurance types required to offer contracting services. You will learn what the coverage is and how it protects you and your customer’s interests.
General Liability - Provides Protection for your Company against financial losses caused by third-party claims of property damage, injury or bodily harm, loss of life or limb, or negligence.
General liability insurance includes blanket coverage that extends to direct or indirect actions of the insured (and the insureds employees), which result in loss or damage, as well as products or structures constructed by the insured that cause loss or damage due to a fault in the structure.
Here in New York a contractors general liability policy should include coverage for the following situations: bodily injury, with coverage including medical costs and lost wages for the injured party; property damage; completed projects and operations; contractual liability covering property leased or rented for the contractor's office or facility; liquor liability, which includes injury related from employees and officers consumption of alcohol at the workplace and/or at work-related functions like holiday parties or mixers; fire, lightning, or explosion damages; hired and non-hired auto coverage; legal defense costs; medical payments and personal injury.
The amounts of coverage necessary in each individual area will differ for every contractor, so engage an insurance professional who can offer expertise and guidance in assembling a policy that will provide adequate coverage. The generally recommended minimum coverage for most contractors is $2 million.
General contractors will require their subcontractors to carry a general liability insurance policy covering themselves and their employees and listing the General Contractor as an Additionally Insured. An insurance certificate will provide proof of general liability insurance and as an Additionally Insured party the General Contractor can expect to be notified within 30 days of a discontinuance or cancellation of the policy.
Workers Compensation - Provides Coverage to employees injured on the jobsite.
New York State requires businesses with payroll employees to carry workers compensation insurance, often referred to as workmans comp or workers comp. Due to the increased risk of injury for construction workers, workers compensation insurance is necessary to protect your employees and your business as well as your clients. This insurance provides wage replacement coverage for any employee who is injured on the job, coverage for medical costs, economic losses, pain and suffering, and in cases where there is an accidental loss of life it may provide settlement payments for dependents.
As with General Liability Insurance, if you are operating as a General Contractor, you will need to require that all of your subcontractors carry and supply proof of their own individual workers compensation policies covering themselves and any employees they will bring to your jobsite.
Disability - Provides Coverage to employees injured off the jobsite.
Short-term disability insurance goes into effect as soon as you or your employee is unable to work due to an illness, injury, or birth of a child. This coverage ranges from as little as a few days to as much as one year. In New York employers must provide at least 26 weeks of coverage.
Inland Marine – Provides Coverage of Equipment and Tools in the event of theft, fire, vandalism and mysterious disappearance.
Inland Marine Insurance covers goods in transit over land, or any goods exposed to possible loss or theft while being shipped, warehoused, or held by U.S. Customs officials or the U.S. Post Office. Coverage may also include goods or equipment other than building materials, but which are frequently transported from one location to another.
Nearly any product, equipment, or material may fall under the umbrella of inland marine insurance. Inland marine insurance coverage may also include scheduled properties, riggers liability, builders risk, contractor's equipment, goods and properties, computers, and communications equipment.
Bonds – Provide a variety of assurances to your customer regarding the satisfactory conclusion of your business together.
A bond is not an actual insurance policy but a form of credit issued by the bondholder or surety to the principal or contractor.
Bond premiums are typically between one and three percent (1-3%) of the bond amount. The bond is then extended as a form of credit. If the client or subcontractor makes a valid claim, the contractor is responsible for the full amount of the bond.
Bonds premiums are not included in your general liability insurance policy. There are many types of bonds including bid bonds, payment and performance bonds, contract bonds, subcontractor bonds, maintenance bonds, supply bonds and license bonds.
Life: Provides coverage for your customer in the event of your demise.
In response to the abundant information being shared by customers, you may occasionally encounter a customer who requests that you provide him with a short-term life insurance policy naming him as your beneficiary.
Short-term life insurance is a relatively inexpensive method to accommodate and promote your customers best interests. The small premium can be passed on to your client as a cost of doing business and the policy suspended or cancelled at the conclusion of your work.
Commercial Auto & Truck - Provides Coverage for Liability and Physical Damage to your vehicles.
Many contractors insure their vehicles under their personal insurance policies since their vehicle is often used as their primary transportation. The greatest difference between personal and commercial auto insurance is the level of coverage. A typical Commercial Auto policy will list coverage of 1 million dollars or more.
Premiums and coverage amounts are determined by the types of vehicles, the level of usage, the type of usage, and number and driving record of the employees listed as drivers.
I have given you the basics on Contractors Insurance. Your next step will be to make an appointment with an insurance professional to assess your individualized needs. You do not want to buy more insurance than you need, nor do you want to spend more than you absolutely must, but more importantly, you want to be sure that you have adequate coverage in the event that you need to make a claim or a claim is made against your business. Upstate New York offers many Insurance Agencies with skilled professionals who are educated and informed about the Insurance requirements for contractors doing business in our state. Beware of purchasing insurance on the Internet, it may seem faster and less expensive but you are assuming some risk of insufficient coverage. Take the time to discuss your businesses insurance needs and educate yourself on how to insure them, ask questions about what is or is not included in your coverage and then work on getting a competitive premium. Remember, it is only a great deal if it meets your needs!
A World of Thanks to Kevin O'Brien of R.J.OBrien Insurance Agency for taking the time to sit with us and educate us on the insurance Contractors need. If you have more questions or if you just need a great deal from an experienced Insurance Agent, call Kevin at (518) 793-5173. R.J.OBrien Insurance Agency is the Independant Insurance Agency that returns your calls! Located at 83 Bay Street in Glens Falls.
General Liability - Provides Protection for your Company against financial losses caused by third-party claims of property damage, injury or bodily harm, loss of life or limb, or negligence.
General liability insurance includes blanket coverage that extends to direct or indirect actions of the insured (and the insureds employees), which result in loss or damage, as well as products or structures constructed by the insured that cause loss or damage due to a fault in the structure.
Here in New York a contractors general liability policy should include coverage for the following situations: bodily injury, with coverage including medical costs and lost wages for the injured party; property damage; completed projects and operations; contractual liability covering property leased or rented for the contractor's office or facility; liquor liability, which includes injury related from employees and officers consumption of alcohol at the workplace and/or at work-related functions like holiday parties or mixers; fire, lightning, or explosion damages; hired and non-hired auto coverage; legal defense costs; medical payments and personal injury.
The amounts of coverage necessary in each individual area will differ for every contractor, so engage an insurance professional who can offer expertise and guidance in assembling a policy that will provide adequate coverage. The generally recommended minimum coverage for most contractors is $2 million.
General contractors will require their subcontractors to carry a general liability insurance policy covering themselves and their employees and listing the General Contractor as an Additionally Insured. An insurance certificate will provide proof of general liability insurance and as an Additionally Insured party the General Contractor can expect to be notified within 30 days of a discontinuance or cancellation of the policy.
Workers Compensation - Provides Coverage to employees injured on the jobsite.
New York State requires businesses with payroll employees to carry workers compensation insurance, often referred to as workmans comp or workers comp. Due to the increased risk of injury for construction workers, workers compensation insurance is necessary to protect your employees and your business as well as your clients. This insurance provides wage replacement coverage for any employee who is injured on the job, coverage for medical costs, economic losses, pain and suffering, and in cases where there is an accidental loss of life it may provide settlement payments for dependents.
As with General Liability Insurance, if you are operating as a General Contractor, you will need to require that all of your subcontractors carry and supply proof of their own individual workers compensation policies covering themselves and any employees they will bring to your jobsite.
Disability - Provides Coverage to employees injured off the jobsite.
Short-term disability insurance goes into effect as soon as you or your employee is unable to work due to an illness, injury, or birth of a child. This coverage ranges from as little as a few days to as much as one year. In New York employers must provide at least 26 weeks of coverage.
Inland Marine – Provides Coverage of Equipment and Tools in the event of theft, fire, vandalism and mysterious disappearance.
Inland Marine Insurance covers goods in transit over land, or any goods exposed to possible loss or theft while being shipped, warehoused, or held by U.S. Customs officials or the U.S. Post Office. Coverage may also include goods or equipment other than building materials, but which are frequently transported from one location to another.
Nearly any product, equipment, or material may fall under the umbrella of inland marine insurance. Inland marine insurance coverage may also include scheduled properties, riggers liability, builders risk, contractor's equipment, goods and properties, computers, and communications equipment.
Bonds – Provide a variety of assurances to your customer regarding the satisfactory conclusion of your business together.
A bond is not an actual insurance policy but a form of credit issued by the bondholder or surety to the principal or contractor.
Bond premiums are typically between one and three percent (1-3%) of the bond amount. The bond is then extended as a form of credit. If the client or subcontractor makes a valid claim, the contractor is responsible for the full amount of the bond.
Bonds premiums are not included in your general liability insurance policy. There are many types of bonds including bid bonds, payment and performance bonds, contract bonds, subcontractor bonds, maintenance bonds, supply bonds and license bonds.
Life: Provides coverage for your customer in the event of your demise.
In response to the abundant information being shared by customers, you may occasionally encounter a customer who requests that you provide him with a short-term life insurance policy naming him as your beneficiary.
Short-term life insurance is a relatively inexpensive method to accommodate and promote your customers best interests. The small premium can be passed on to your client as a cost of doing business and the policy suspended or cancelled at the conclusion of your work.
Commercial Auto & Truck - Provides Coverage for Liability and Physical Damage to your vehicles.
Many contractors insure their vehicles under their personal insurance policies since their vehicle is often used as their primary transportation. The greatest difference between personal and commercial auto insurance is the level of coverage. A typical Commercial Auto policy will list coverage of 1 million dollars or more.
Premiums and coverage amounts are determined by the types of vehicles, the level of usage, the type of usage, and number and driving record of the employees listed as drivers.
I have given you the basics on Contractors Insurance. Your next step will be to make an appointment with an insurance professional to assess your individualized needs. You do not want to buy more insurance than you need, nor do you want to spend more than you absolutely must, but more importantly, you want to be sure that you have adequate coverage in the event that you need to make a claim or a claim is made against your business. Upstate New York offers many Insurance Agencies with skilled professionals who are educated and informed about the Insurance requirements for contractors doing business in our state. Beware of purchasing insurance on the Internet, it may seem faster and less expensive but you are assuming some risk of insufficient coverage. Take the time to discuss your businesses insurance needs and educate yourself on how to insure them, ask questions about what is or is not included in your coverage and then work on getting a competitive premium. Remember, it is only a great deal if it meets your needs!
A World of Thanks to Kevin O'Brien of R.J.OBrien Insurance Agency for taking the time to sit with us and educate us on the insurance Contractors need. If you have more questions or if you just need a great deal from an experienced Insurance Agent, call Kevin at (518) 793-5173. R.J.OBrien Insurance Agency is the Independant Insurance Agency that returns your calls! Located at 83 Bay Street in Glens Falls.
# posted by GC Network : 11:33 AM
