sure your policy is written on Occurrence Forms and not a Claims-Made policy.
All said, the world of insurance is complex. The days of a handshake and doing business with someone just because “he’s a good guy and we’ve gone fishing together” are over. There needs to be a contractual relationship that includes “hold harmless” language and adequate insurance protection to include Additional Insured endorsements favoring the general contractor. It is important for you as a company owner to understand the legal ramifications of what you are buying and to make sure that both your business and your employees are adequately protected. For this you will do well to hire an independent agent who has knowledge of the construction business. Take advantage of their loss-control programs. It will help your company’s bottom line, and it will signal to your employees that you have their safety in mind.
Many thanks to Tom Maupin, Senior Vice President of Marketing, Builders Insurance Group, who contributed the information for this article. Maupin oversees the promotion of the company’s products in 17 states through a network of over 650 independent insurance agents. He provides “big picture” business and strategic information with regard to safety training. www.bldrs.com
Hiring and screening: Utilize background checks and post-hire medical questionnaires. Criminal backgrounds and a history of suspicious injury claims can be good predictors of potential fraud.
Create a positive work environment A happy workforce reduces the odds of Workers’ Comp fraud at your business. So help to create a safe and supportive workplace.
Show you care about safety and your employees. Build strong teamwork among your employees about safety. Equally important, be clear that you won’t tolerate fraud.
Many of the principles that affect Workers Compensation insurance also apply to General Liability insurance. For example, you as the General Contractor carry the liability for any uninsured subcontractor. The same issues outlined above apply. Here are a few additional items to consider:
Purchase your coverage from an “admitted” carrier who utilizes the most recent ISO (Insurance Services Office) approved policy forms (CG 00 01 04/13). Non-admitted carriers can have “tricky” policy language, do not have their rates or forms approved by the state, and do not participate in the state insolvency pool.
With any policy, review the exclusions carefully, especially those attached as a separate endorsement to the policy. Ask your agent for a copy of all forms and endorsements prior to purchasing coverage.
For contractors, common exclusions are for: Prior completed operations
Certain types of construction i. e. multifamily, condominium, townhomes, height restrictions, number of units in a development etc.
Estimate your payroll and your subcontracted costs accurately: Overestimating or underestimating these costs can create unfavorable situations for the employer. Understand how your carrier treats subcontractor’s costs and materials.
Not understanding your coverages: Business insurance policies are often offered in two forms. One is the Claims-Made policy and the other is the Occurrence Forms policy. Before agreeing to purchase business insurance, you should understand the differences between the two types of policies. Make