General Contractors: insurance, risk transfer, additional insureds… where do I start?

Posted by Matt Simon on Dec 8, 2016

Whether your'e a residential or commercial contractor, building a single home or a 300,000 square foot office building, as a General Contractor, you have a great deal of responsibility.

You likely have many subcontractors working for you, providing plumbing, roofing, drywall or siding.  And those subcontractors likely have subcontractors working for them.

However, as the General Contractor, you're viewed as the overall manager of the project who is ultimately responsible... for the good or bad.

Let's face it, in today's construction world the reality is, it's as much about the 'business' as it is the construction.

Dealing with insurance requirements, trying to determine how to properly transfer the risk that really shouldn’t be on your shoulders in the first place, and managing a deluge of additional insured requests, and this all occurs before the first brick is laid.

But the fact is, you face a number or risks on a daily basis.  The risk that your completed project doesn't hold up the way it should, or the risk that one of your employees is involved in an accident while driving a truck owned by your business.

We think that your time is best spent focusing on providing an outstanding experience for your customer, and not worrying about everything that could go wrong.

Which is why your insurance plan should be just as comprehensive and durable as the jobs that you complete for your customers.

So what happens if someone is critically injured by one of your employees at a jobsite?  Or there's a tragic auto accident when your crew is on their way to their next job?

Could your business survive a catastrophic accident?

If you follow this guide to properly insuring your General Contracting business in Ohio, you should feel confident that in the face of a financial disaster, your insurance coverage will protect you and your business.

It doesn’t matter if you’re an independent contractor, or if you have 100 employees on your payroll. And it doesn’t matter what type of project you’re working on. The fact is, you need to protect your business before a loss happens that could force you to suspend or lose work.

Like any other business, General Contractors need a variety of insurance coverages to ensure their operation is protected. Additionally, rules and coverages can vary from state to state, so understanding Ohio General Contractor Insurance is essential.

Commercial General Liability Insurance

To start, every General Contractor needs a Commercial General Liability (CGL) insurance policy.  The coverage provided by this policy would protect your business when lawsuits or financial losses occur.

A typical CGL policy provides coverage for claims of bodily injury or other physical injury, personal injury (libel or slander), advertising injury and property damage as a result of your products, premises or operations.

For example, one of your employees was operating a backhoe on the jobsite of a multi-story office building you were hired to complete.  Your employee accidentally swung the bucket into the side of portion of the building that was complete.

Not only was there clear damage where the bucket hit the building, but now there’s allegations that the entire foundation may be compromised.

If you didn’t have Commercial General Liability Insurance at the time this occurred, you’d be paying for the damages, including the legal bills to follow, out of your own pocket.

But with a CGL policy, your insurance company could step in and handle everything on your behalf – no downtime to your business, no lost revenue, and nothing for you to pay out of your own pocket.

As a safeguard against liability, CGL enables you to continue your normal operations while dealing with real or fraudulent claims of negligence or wrongdoing. CGL policies also provide coverage for the cost to defend and settle claims.

Commercial Auto Insurance

Commercial Auto Insurance is another important policy that all Ohio General Contractors must consider because you’re relying on vehicles to get you from one client to another.  Doesn’t matter if you have one truck, or a fleet of 100, you still need Commercial Auto Insurance.

The trucks or trailers that you’re using to haul your equipment and materials should be insured. A Commercial Auto Policy can be used to insure vehicles for:

  1. Liability – this would protect the business owner in the event of an at-fault accident where the owner, or any employees, caused injuries to others while driving a company vehicle
  2. Physical damage to the vehicles owned by the business if they’re involved in an accident, stolen or vandalized
  3. Or both Liability and Physical Damage

For example, one of your employees is hauling one of your expensive Bobcats to a job site when he's involved in a severe accident with another driver.

Your employee is at fault, there is extensive damage to both vehicles, the Bobcat is totaled, and there will be medical expenses for both drivers.

Your Commercial Auto policy could cover the property damage, the medical expenses and any potential legal costs involved.

Coverage for your Bobcat would be provided on an Equipment Floater, sometimes referred to as an Inland Marine policy or Contractors Equipment insurance.

Contractors Equipment Insurance

General Contractors usually have a fair amount of tools and equipment.  This equipment could be located at your business or office, in one of your vehicles, or on the jobsite. Because these items move around, the best way to insure them is with an Inland Marine Insurance policy (also known as a Contractor's Equipment policy or floater).   

For example, that Bobcat that was being delivered to the jobsite, but was totaled before it arrived.

If you thought you were covered because you had a Commercial Property policy, you’re probably going to be upset when you find out that policy only covers property while it’s located on your business location.  The Bobcat that’s off your business premises wouldn’t be covered.

However, if you had covered the Bobcat on an Inland Marine policy, your insurance company would reimburse you the cost to replace your Bobcat, up to the limit of coverage on your policy.

Conclusion

This is only the beginning to the insurance coverages that need to be considered.  However, with these 3 policies (CGL, Commercial Auto and Contractors Equipment), you can form a solid foundation of protection for your business.

Finding the best insurance policy for General Contractors in Ohio, and figuring out the types of coverage needed to protect your business, can be confusing, time consuming and difficult.

However, the right insurance protection is still critical to the success of your business.  Without it, you're one claim away from being out of business.

And remember, not all policies are created equal.

You probably wouldn’t go to your eye doctor instead of your dentist if you were having a toothache, right?  Just because they’re both doctors doesn’t mean they have the same skillset.

Just the same, you need an Insurance Advisor that understands your industry, your risks of loss, and how best to protect you and your business.

We can help.

We know the industry, we understand your needs, and we work with multiple insurance companies so we can deliver the insurance solution that’s perfect for your business, and your budget.

In addition, we can help you with several critical 'business' components so you can focus on what you do best - delivering a top-notch finished product for your client.  Specifically, we can:

  • Assist you in developing a comprehensive Risk Transfer Checklist
  • Help you draft an Insurance and Indemnity Agreement you can use with your subcontractors that satisfies insurance companies, thereby improving your eligibility status with the nation's best insurance carriers
  • Provide industry-leading safety manual material so you can mitigate your risks of a claim occurring, reduce the number of employees being injured on the job, and comply with OSHA requirements
  • Develop Certificate of Insurance requirements that your subcontractors should meet, and a program for following up when they're out of compliance
  • With your help, implement a 'Safe Driver Program' to reduce the likelihood of an auto accident, and then leverage this program to obtain additional Commercial Auto premium discounts for you

The bottom line is, when you have confidence in your business insurance, you have greater peace of mind knowing that you can keep working to generate revenue, even when disaster strikes. 

To get started on your customized solution, contact one of our Licensed Advisors, or Request a Proposal and we’ll get to work right away.

Category: Business Insurance (3), Commercial Auto Insurance (3), General Liability Insurance (3)