The most suitable choice during this period of economic instability is frequently to pursue something you love doing, and so we’re seeing tons of folks starting new companies around their construction abilities. General liability insurance is among the first kinds of policies you may want if you’re beginning a brand new contracting company. I think we all recognize a universal fact: Just because you love to build things does not mean you understand the perfect way to shield yourself and your business from lawsuits.
Here are a few tips for pitfalls when purchasing PA contractors general liability insurance you should avoid.
Deciding on the best representative – The first area folks usually go to for their company insurance is the insurance agency that manages their personal auto insurance and their home. Sometimes this will work out nicely. But the danger is that your present broker may be licensed while actually possessing almost no expertise in assessing the dangers and dangers of your particular type of company to sell you general liability insurance in your new business. I’d propose that you just go out there and try to find an agent who specializes in contractors coverage. Ask your opponents and industry friends who they’ve used. At established Pennsylvania companies like Dryfoos Insurance, they’ve got a market specialization in contractors that are modest and their demands and understand your language. I propose you locate one of these types of agencies, if your representative does not specialize in contractors coverages.
Claims Made or Event Coverage Kind – Builders’ claims-made policies have existed ever since they became popular in the mid 1980’s. The guarantee of these coverages were lower rates, but at what long term damage? In some cases there’s no price economics that can justify this system. Claims made for a contractor are the worst potential coverage you’ll be able to purchase in terms of available polices.
Let me clarify what it is though: Claims made policies let you make a claim in your policy just during the year your contract is in force. Contractors have claims in the future, not always only in the exact same year as the job is constructed, so you can immediately see the issues there.
In addition, if you would like to leave that business and go to another business, you’ll need to buy additional insurance to insure you for the next 10 years… that is right, 10 years! Why? Because the law permits a suit to file for building issues for up to a decade after the job was finished.
A claims made policy is not going to let a claim file 4 years later unless the entire time you’ve remained with that same business. This coverage will expand the period in which a claim can be filed, and tail coverage is expensive.
To make matters worse, the 10 year extension is not offered by some businesses.
When your claims made coverage comes up for renewal, you must determine:
• Do I go without protection, or leave the business and pay the added insurance for coverage for the next ten years.
• Do I remain with the exact same firm? The same may remain or go up aggressively.
• Do I change to another firm and coverages?
This makes it more difficult to accept a better bid from another insurance company, and restricts the market accessible to you.
Insurance Company Evaluation – It’s your responsibility ask your representative about the fiscal well-being of the business from whom you’re purchasing your general liability insurance from, and to do the due diligence these kinds of coverages require. Use only A or higher insurance companies to shield your company.
Exclusions – Comprehend what they exclusions may specifically mean for you and the insurance company. Certainly make sure to take time to request your broker about the coverage exceptions.
Here are a few exceptions when buying an overall liability insurance policy that contractors should consider:
If you do not know precisely what these mean on your coverage for you, contact your agent and get the help you need to understand it definitely. This may alter how your company runs — hopefully for the better.
Subcontractors – Be sure you understand how subcontractors are treated by your coverage. Are you insured if your subcontractors fails to have any insurance or for the loss they may cause? How frequently should you get certificates of insurance? How can you be sure the certification of insurance is not unlawful. (I’ve seen deceptive certs for sale on eBay). If you’re unclear about the responses to these questions vis-a-vis your company and your general liability coverage, you’ll need to find a source that can get you the responses you need so you can sleep at night — phone your broker immediately.
As you can see, purchasing general liability insurance isn’t as simplistic as getting an easy estimate and phoning some random broker. You require a seasoned professional that understands your company and the coverage forms.
Remember to keep yourself aware, and always ask questions regarding liability, time tables, subcontractors, evaluations and exclusions. Then you can be confident you have the right Pennsylvania Contractors’ Insurance.