Common Problems That Can Arise When Insuring Contractors

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Insuring Your Contractor Clients

Contractors Insurance 101

Common problems that can arise when insuring contractors

Insuring your contractor clients requires a lot more attention than insuring your local flower shop. There are several factors that brokers need to consider before shopping around for a policy. Is your client an independent contractor? What type of work does your client do? 

It is important to understand the contractual agreement between your client and their clients in order to determine what insurance is required. 

 

Generally, a contractor that is hired by a business (and directs how the work is carried out) is responsible for any injuries to third parties that were caused by the contractor’s negligence. 

Binding Issues that can occur

The most common setback brokers encounter when insuring their client is dealing with limitations on classifications. Your client may request specific wording to be included in the certificate of insurance that may require a declarations page. 

 

Your client may even request specific wording that states they are covered for something that is actually impossible to insure, such as all roof work. 

 

If you have been working with contractors then you will know that there are no one-size-fits-all policies for general contractors insurance, even though the client expects there to be.

Greenwood General Insurance Agency is staffed with seasoned Underwriters  ready to assist you in your risk submission to ensure all the necessary information is provided. The Underwriters at Greenwood specialize in providing our brokers with everything they need to ensure their success.

Additional Insured

Your contractor clients can also request an additional insured to be added to their policy, this allows for extra people to be covered under an existing policy. 

 

However, due to the client’s nature of work, the contractor could end up with over 20 additional insureds listed on their policy by the end of the year.

Per Project Limit

Most insurance policies have a limit for the amount of additional insureds that can be added, resulting in subcontractors or project owners left uncovered. This is when it’s great to consider a policy with a per-project limit. 

 

The per-project limit allocates a specific limit of additional insureds to a specific project, therefore, if a claim were to arise, the insured would be able to collect from the full policy limits.

Resources: Landesblosch

                    The Balance SMB

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