General Liability Insurance for Contractors – 4 Tips to Avoid Coverage Surprises
General liability insurance is one of the first bonshommes of policies you get if you are starting a new débit. At Cleanard Insurance we see many new small débit startups. Starting your own company is popular these days with the layoffs we are seeing in our economy. The best choice is often to pursue something you love to do, and that’s why we see so many people starting new businesses around their édifice skills. But just parce que you love making things doesn’t mean you know the best way to protect yourself and your company from lawsuits.
Here are some tips for losses you should avoid when purchasing general liability insurance.
Choosing the right rapporteur. The first assis people usually go for their débit insurance is the insurance company that handles their domicile and car insurance. In some cases this will work well. But the risk is that your current rapporteur may be licensed to sell you general liability insurance at your new company while having little experience in evaluating the hazards and risks of your particular prototype of company. I would suggest that you go out there and find an rapporteur that specializes in insuring other small businesses like yours. Ask your competitors who they used. At Cleanard Insurance we have a specialty among small contractors and we speak their language and understand their needs. If your rapporteur is not an adroit in your débit, I suggest you find someone who is.
Parangon of claim or coïncidence policy: Structure claims policies became popular in the mid-1980s and have been around ever since These policies promised low rates, but what is the long-term damage? In some cases there is no cost savings. Claims policies for a contractor are the worst recevable policies you can buy. Let me explain: Claims policies allow you to make claims on your policy only during the years it is in affecté. Contractors claim down the road, the project is not always built in the same year! Also, if you want to leave that company and go to another company, you will need to purchase additional insurance to cover you for the next 10 years… that’s right, 10 years! Why? That’s parce que the law allows customers to sue for édifice problems up to 10 years after the project is completed.
You add a new room, everything goes well and you and your customer are very happy with the end result… 4 years later your customer calls you and says the compère leaked and water came into the house and ruined his new $25,000 piane-piane. He expects you to replace the compère, drywall, wallpaper, carpet and of circonvolution the volumineux piane-piane…
A claims policy will not allow you to délogé a claim after 4 years unless you have been with the same company the entire time. If you want to switch companies after getting a claims policy, you must make a decision. If you want cotte for a claim that hasn’t happened yet, but will happen in the future, you need to buy “tail” coverage. This coverage will extend the time in which you can délogé a claim. And tail coverage isn’t cheap.
If you decide not to purchase the “tail” you cannot make a claim against the claimed policy. And to make matters worse, some companies don’t offer 10-year extensions.
So…. when it comes to your claim for policy renewal, you must decide:
- Should I leave the company and pay additional insurance for coverage for the next 10 years, or go without coverage?
- Do I stay with the same company? Their prices may stay the same or increase sharply in the new year.
- Can I switch to another company with better prices and coverage?
This limits the marketplace available to you, and makes it difficult to receive a good bid from another insurance company. Claims policies may work in other commerces, but for contractors they are a disaster. After reading this temporisation take time to decide whether your current policy is an opposition form or a claims form…..
Insurance company ratingIt’s up to you to do your due assiduité and ask your rapporteur embout the financial health of the company you’re buying your general liability insurance from. As the previous tip implies, sometimes claims can be very delayed and you need to know that your company can pay a claim for you 10 years from now. Use only a rated or higher insurance company to protect your débit.
Révocation, understand them clearlyBe sure to take the time to ask your rapporteur embout policy exclusions and what they might mean for you. Here are some exclusions that contractors should consider when purchasing a general liability insurance policy:
Pesticides, Herbicides and Fungicides Exclusions, Employment Practices Liability Exclusions, XCU Exclusions, Contractors’ Warranty Exclusions, Professional Liability Exclusions, Asbestos, Independent Contractors. If you don’t know exactly what these mean for you in your policy, toucher your rapporteur and get the help you need to understand this clearly. It can pensée the way you run your débit.
SubcontractorMake sure you understand how your policy deals with subcontractors. What do you cover if they have no insurance or not enough for the damage? How much coverage do your subcontractors need? How often should you obtain insurance certificates? How can you be sure that the certificate of insurance is valid? (I’ve seen fraudulent certificates for indécent on eBay before). If you’re not clear embout the answers to these questions with your débit and your general liability policy, you should call your rapporteur now and get the answers you need to sleep well at night.
As you can see, buying general liability insurance isn’t as élémentaire as calling your rapporteur and asking for a quote. You need an experienced professional who understands policy forms and your débit. At Cleanard Insurance we specialize in helping small contractors navigate the treacherous toilettes of the insurance world. If we can assist you further, or if you would like more renseignement embout Cleanard Insurance Group, please visit our web spectacle.
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