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Contractor Insurance and Managing Subcontractor Risk

Posted by David Ross on Sun, Jul 15, 2018

Contractor Risk Management is key to managing subcontractor risks. A key factor is to obtain the right Contractor Insurance.Risk management is part of any successful business, and it is especially true in an industry fraught with as many dangers as construction. Accidents that cause injury, damage, or death occur on worksites across the country every day.

Preventing those injuries is your first line of defense. That might include actions like creating and enforcing a safety management program, providing proper safety training, offering protective gear when appropriate, etc.

 

Contractor Insurance is Key to Managing Risk

Unfortunately, accidents can still occur. That’s where contractor's insurance comes in. The right coverage will protect your employees, your customers, and your business.

You probably know all this, but what happens when a subcontractor that you’ve hired is injured or causes an injury or damage? Hiring subcontractors is a prevalent practice in the construction industry because the more people you have working on a job, the more you can get done, right?

We think it’s pretty safe to say that’s true, but subcontractors also add another level of risk, which makes it essential to understand the role contractor insurance plays with subcontractors. Here’s some info that may help.

 

Subcontractor Risk Considerations 

#1 - Employee vs. Subcontractor

With an employee, you are required to pay Social Security and Medicare taxes, pay unemployment tax on wages, provide workers’ compensation in many cases, etc. The headaches and expenses of an employee can quickly add up.

But with subcontractors, you don’t have to pay the same taxes or provide WC insurance. Therefore, some contractors misclassify employees as subcontractors. Sometimes it’s even done by mistake because there are so many variables that determine whether or not someone is an employee.

Even the IRS admits there is no simple formula to determine if a worker is an employee or an independent contractor, and factors which are relevant in one situation may not be applicable in another. “The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination,” according to the IRS

 

Misclassifying an employee as a subcontractor can end up costing you more in fines and penalties than you would have paid if they were classified correctly. This makes it imperative that you make the right classifications. Here are some tips to do that.

Determine the Business Relationship 

First, you need to determine the business relationship that exists between you and the person performing the services including your degree of control over them and their independence. The IRS provides these three categories to provide evidence of that control or independence. 

  • Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
  • Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  • Type of Relationship: Are there written contracts or employee type benefits (e., pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

#2 - Get Subcontractor Insurance

If you have determined that you are dealing with a subcontractor and not an employee, you do not need to worry about workers’ compensation insurance; however, you still face risks. Don’t assume that your contractor’s liability insurance will cover you in the event that a subcontractor’s work causes damage or injury. Damages caused by individuals other than your employees are excluded in many general liability policies.

Your first step is to make sure that all of your subcontractors have their own general liability coverage that is adequate to cover any injuries or damage. Have them to provide a certificate of insurance as proof. The International Risk Management Institute (IRMI) suggests the following minimum general liability insurance limits for subcontractors:

  • $1,000,000 each occurrence (the combined single limit for bodily injury and property damage);
  • $1,000,000 for personal and advertising injury liability;
  • $1,000,000 aggregate on products and completed operations;
  • $2,000,000 general aggregate.

#3 - Get Listed as an Additional Insured 

You should also make sure that your subcontractors include you as an additional insured on their commercial insurance policy to protect you against their negligence.

 

Be Prepared - Contact Us Today! 

Get affordable contractor insurance throughout PA, including Philadelphia, Reading, Lancaster, Allentown, Pittsburgh, Erie, Harrisburg and beyond.Accidents happen, but the right insurance will help protect your business. For more information about contractor insurance and any time of business insurance you may need, contact American Insuring Group at (800) 947-1270 or (610) 775-3848 or contact us online.

You can rest assured that we'll find you affordable contractor insurance at a great price because our independent agents are free to scour the market and to compare policies among lots of competing providers.

Tags: Contractor Insurance, Builders Insurance

Protect Your Construction Investment with Builder’s Risk Insurance

Posted by David Ross on Tue, Aug 30, 2016

Builders risk insurance is a form of contractor insurance. Be sure to know what is covered and not covered. We serve Philadelphia, Reading, Lancaster, Harrisburg, Allentown, the Lehigh Valley, Erie, Pittsburgh, PA and beyond.Having a freshly constructed building for your business is exciting. It’s the culmination of an undertaking that involved the acquisition of land, working with an architect, hiring a construction company, and picking out the furnishings. After you have completed the project, you will have added a significant investment that you will undoubtedly protect with a well-designed insurance program.

But what about the risks that the project will be exposed to while construction is underway? Many of the risks to your finished building--fire, theft, vandalism, and other hazards--are the same threats that can haunt the construction phase of the project. Damage to work that’s in progress or to the construction equipment, for instance, can make it impossible to stay within budget or to remain on schedule.

Builder’s risk insurance provides valuable protection

Builder’s risk insurance, a form of contractors insurance, offers specialized coverage that protects your insurable interests in the construction or renovation of a building or structure if those items should sustain physical loss or damage from a covered cause.

But the term “builder” can be misleading since insureds can include the ultimate owner or a lending institution in addition to the contractor who is doing the construction work.

Understand your policy’s provisions

The various options available under builder’s risk coverage depend on the policy’s provisions. These provisions will include the causes of any loss and risks against which you are being insured. The wording should be studied before the construction contract is signed to avoid any coverage problems during construction.

Many builder’s risk policies take a broad approach to the property to be covered, indicating that the coverage applies to all property intended to become a permanent part of the construction, installation or erection of the project. Other policies may refer to covered property as “buildings or structures in the course of construction, erection or fabrication.” If this is the policy’s wording, you need to remember that although a building is a structure, not all structures are buildings. Since a building is usually considered to be an occupied structure, if the construction project involves a structure, identify it as such, and confirm the insurer writes the provisions of the policy with the structure in mind. 

Know which losses are covered by your builder's risk insurance

It’s common for a builder’s risk policy to provide coverage for certain items. The list includes:

  • Scaffolding
  • Temporary structures
  • Construction forms
  • Cribbing

Some insurers cover these automatically, and some will subject them to a limit. Others may require you to add their values to the policy limit. In most cases, the contractor’s equipment—ditch diggers, bulldozers, etc.--is not covered. For these items, an equipment floater is recommended.

Know which risks are not insured

Insurance companies write most policies on an all-perils basis. In other words, coverage applies to physical loss or damage from any cause of loss, unless the loss is limited or results from an explicitly excluded peril. The “non-fortuitous” loss is excluded even though it might not be expressly stated. This is a loss that is expected to happen or has been caused intentionally. It is not accidental and therefore not a loss that will likely be covered by insurance.

Commonly excluded are losses brought about by the following:

  • Ordinance or law
  • Nuclear hazard
  • Earth movement
  • Flood
  • Civil authority
  • Contamination

Also generally excluded are losses from criminal, fraudulent, dishonest or illegal acts; mechanical breakdown; loss of use and consequential losses; wear and tear; pollution and steam boiler explosion, which can be covered by a separate breakdown policy.

Keep in mind that you must tailor builder’s risk insurance coverage to the specific risks associated with your project and to the expectations of all project stakeholders.

Get the Right Builder's Risk Insurance Policy

Contact us for help in selecting the best builder's risk contractor insurance for your businesss.We can help you create a policy that meets the needs of your construction project. As independent insurance agents, we're free to shop among competing providers to help you obtain the best insurance solution at the right price.

To learn more about builder’s risk insurance, contact American Insuring Group online or call us at (800) 947-1270 or (610) 775-3848.

Tags: Builders Insurance, Contractor Insurance, Business Insurance, Commercial Insurance

3 Business Insurance Must-Haves for the Construction Industry

Posted by David Ross on Thu, Feb 19, 2015

3 Construction Insurance Must-Haves

Must-have construction insurance tips for Reading, Philadelphia, Lancaster, Harrisburg, Allentown, Pittsburgh, Erie, State College, PA and beyondWhether you’re a subcontractor or a general contractor – whether you build small backyard sheds or giant commercial buildings – whether you’re a one-man remodeling business or a multi-million dollar construction company, there are three types of insurance you need to consider.  In other words, the size of your business and the size of the project make little difference.  If you want to protect your investment, your employees, and even your business, there are three types of commercial insurance to consider: Liability Insurance, Builders Risk Insurance, and Flood Insurance. 

Commercial Liability Insurance (A.k.a. Commercial General Business Liability Insurance)

Commercial Liability Insurance is a critical part of any business’s insurance portfolio and particularly pertinent in the construction industry where accidents and injuries are more common. Commercial Liability Insurance protects you and your company if someone gets hurt on your property or if you or an employee causes property damage or injury on a job site.  This insurance helps cover medical and legal defense costs and settlements if you are sued.  Extended litigation (including attorney fees and court costs) can quickly deplete your cash reserves - even if the claims are found to be unwarranted.  

The amount of liability insurance is proportionate to the cost of the project.  Generally, you should have coverage that is two to three times the amount of the construction project budget.  In addition, businesses with higher risk for damages, such as roofing contractors, may need higher coverage.

Before you begin to build, repair, or remodel any structure – even as a subcontractor - common business standards require that you provide evidence of liability insurance.  Adequate General Liability Insurance safeguards your business – even in today's litigious environment.

Builder’s Risk Insurance (A.k.a. Course of Construction Coverage)

Builder’s Risk Insurance (construction insurance) is property insurance that covers damage to a building during construction.  It may cover just the structure itself, or it can include materials, fixtures, and/or equipment being used in the construction or renovation of the building.  Lending and municipal authorities will often require this insurance, and it can apply to both new construction and remodeling projects.

Most Builder’s Risk Insurance policies cover damage caused by fire, wind, lightning, hail, theft, vandalism, and damages by aircraft and vehicles. Items that generally are not covered include damage due to earthquake, employee theft, water damage, and mechanical breakdown.  Damage resulting from faulty design, planning, workmanship, or materials is rarely covered, and it’s important to note that Builder’s Risk insurance doesn’t cover tools and equipment or the property of others (that’s why it’s important for sub-contractors to have their own insurance).

Flood Insurance

Flood insurance is typically covered by the National Flood Insurance Program and usually has a 30-day waiting period before entering its coverage period.  This is done so the insurance isn’t purchased only when a flood is expected. 

Flood insurance is required in high-risk areas and strongly recommended in moderate-to-low risk areas.  It normally covers damage caused by tidal waves, overflow of inland water, unusual accumulation of runoff water, and water exceeding normal levels. 

 

We're independent insurance agents serving offering quality construction insurance protection for Philadelphia, Reading, Pittsburgh, Erie, Harrisburg, State College, Lancaster, Lebanon, Allentown, Lehigh Valley, Pennsylvania and beyond.For more customized information about your construction insurance or contractor insurance needs, contact American Insuring Group at (800) 947-1270 or (610) 775-3848. We'll help get you the right coverage for your projects at the right price. That's because we're independent agents offering over 25 competing brands of insurance, so we're free to find you the best deal in quality insurance protection. Contact us today.

 

 

Tags: Builders Insurance, Construction Insurance, Construction Risk Insurance, Contractor Insurance, Flood Insurance, Commercial Insurance Allentown PA, Commercial Insurance Harrisburg PA, Commercial Liability Insurance, Commercial Insurance, Business Insurance, Commercial Insurance Philadelphia PA

Pet-Friendly Workplaces: Benefits, Risks, and Business Insurance

Posted by David Ross on Mon, Dec 01, 2014

Is a Pet-Friendly Workplace Right for Your Business? Understand the Benefits, Risks, and Business Insurance Needs.

Know the benefits, risks, and business insurance protection needed for a successful pet-friendly workplace. Offering quality business insurance for over 25 years to Philadelphia, Reading, Lancaster, York, Lebanon, Harrisburg, Allentown, the Lehigh Valley, Erie, Pittsburgh, PA and beyond.Thirty-nine percent of households have dogs, so it’s no surprise that more companies – including Google, Etsy, and Build-A-Bear Workshop – are allowing employees to bring their dogs to work.  After all, Congress has been dog friendly since the 19th century.  And, according to a survey conducted by the American Pet Products Manufacturers, 17 percent of Americans work at pet-friendly companies. What are the benefits? What are the risks? Does your business insurance adequately cover the risks? You should know the answers to these questions before implementing a pet-friently workplace policy.

Pet-Friendly Workplace Benefits

Offering a “bring your pet to work” policy can definitely have its advantages.  It has been shown to lower employees’ stress levels and absenteeism; boost morale and create a more positive work environment; improve job satisfaction, which improves retention; encourage people to work longer hours; attract new employees by standing out among the competition; and offer opportunities for exercise and non-work-related interaction among employees. The Centers for Disease Control and Prevention cites dozens of animal experts who report that pets can decrease blood pressure and cholesterol levels as well as increase opportunities for exercise and socialization.

Pet-Friendly Workplace Risks

If you’re considering opening the doggie door on your business, there are a few things you should consider.

  • If you lease your workspace, make sure the landlord allows pets.
  • If any part of your business involves the handling of food or beverages or offering personal care services, such as day care or elder care, check licensing bureau regulations.
  • An animal allergy may be considered a disability under the Americans with Disabilities Act (ADA) of 1990. If you ignore or don’t make reasonable accommodations for an employee who is allergic to animals, you could open your business to potential ADA liability.
  • People who are afraid or uncomfortable around pets can also create possible ADA liability. A former mail room clerk from Foodarama Supermarkets in New Jersey brought an ADA claim in which she alleged that her former supervisor occasionally brought his house cats to the office, despite the fact that the employee had previously informed him of her condition as an ailurophobe (a person who is afraid cats).  Although courts are reluctant to find liability under strict liability statutes or under ADA accommodation laws, an employer could still face the expense of defending such a suit if they allow pets in the office.
  • A pet can bite another employee, customer, or delivery person.

  • A pet can damage or destroy property, such as carpets, computers, and other office equipment and furniture, or even “eat your presentation."

Business Insurance and Other Ways to Keep Your Business Out of the Doghouse

  • Have open discussions with your employees about concerns, such as allergies, accidents, etc., and how you will accommodate them.

  • Create and enforce a comprehensive written pet policy.
  • Require that employees prove that their pets will respond to basic commands, such as “sit” and “stay.”
  • Limit the number of pets allowed in the workplace at one time.
  • Enforce a zero tolerance for aggressive pets that growl, bark, chase, or bite.
  • Establish pet-free zones.
  • Require that pet owners show that vaccinations are up to date and that pets are licensed and free of parasites and insects.
  • Require proof, in writing, that pet owners have sufficient home owners’ or renters’ insurance to cover damage caused by their pet and carefully check exclusions.  Some policies have a business-pursuit policy exception and some exclude certain breeds, such as Pit Bulls and Rottweilers. 
  • Consider indemnification in case your business gets sued.
  • Ensure that your business insurance will cover any liability associated with pets in the office. 

Contact us for the right business insurance to support your pet-friendly policy.Contact Us for the Right Business Insurance Protection to Support a Pet-Friendly Workplace

A pet-friendly workplace isn’t right for every business, but if you decide that it could be a good fit for your company, your first step should be contacting the independent insurance agents at American Insuring Group at (800) 947-1270 or (610) 775-3848. We offer business insurance protection from competing insurance providers. We'll help you find the right policy at the right price. Contact us today.

Tags: Builders Insurance, Business Insurance Reading PA, Business Insurance Berks, Business Insurance Philadelphia Pa, Business Insurance Lancaster Pa, Business Insurance Harrisburg Pa, Business Insurance York Pa, Accident Insurance, Commercial Insurance, Business Insurance Allentown PA, Business Insurance

Do You Need Builder’s Risk Construction Insurance?

Posted by David Ross on Tue, Nov 04, 2014

What is Builder's Risk Insurance?


Builder's Risk Insurance - We offer construction insurance coverage in Philadelphia, Lancaster, Reading, Allentown, the Lehigh Valley, Harrisburg, Pittsburgh, Erie, State College, York, Lebanon, Hershey and surrounding areas. Call us for a free quote.Builder’s Risk Insurance (a.k.a. Course of Construction Coverage) is property insurance that covers damage to a building during construction.  It may cover just the structure itself, or it can include materials, fixtures, and/or equipment being used in the construction or renovation of the building.  

Why Builders and General Contractors Need It

Builder’s Risk Insurance is often required by lending and municipal authorities. It can be required as a condition of many contracts, and it can apply to both new project construction and remodeling projects.  It protects the custom builder or general contractor from financial loss due to damage.  Builder’s Risk Insurance is sometimes purchased by the ultimate owner of the property, the lending institution, or others.

What Does it Cover and How Much Insurance is Needed?

Most Builder’s Risk Insurance policies cover damage caused by fire, explosions, lightning, hail, theft, vandalism, and damages by aircraft and vehicles. The amount of coverage should represent the total value of the structure, including labor costs and the cost of raw materials; however, the cost of the land value should not be included.  The construction budget is a good way to determine the amount of coverage needed.

It is normally taken for a period of three, six, or twelve months, but can be extended if the duration of the construction exceeds the duration of the policy, but only one extension at a time is possible.  Builder’s Risk insurance is intended to cover unforeseen damage during the construction period only.  Coverage should be effective prior to when the materials are delivered to the job site.

Once the work has been completed and the property is ready for use or occupancy, the policy terminates.  Once the Builder’s Risk coverage has expired, the new owner should take out permanent property insurance, such as a home owner’s insurance policy or a commercial property insurance policy.

What Doesn’t it Cover?

Generally, Builder’s Risk Insurance does not cover damages caused by earthquakes, employee theft, water damage, contract penalty, flood, wind, war, government intervention, damage to property left in the open, or machinery breakdown.  It also doesn’t cover damages that occur as the result of inferior quality materials, inefficient design or planning, or faulty workmanship. 

Tools and equipment are not covered.  Builder’s Risk Insurance doesn’t cover for liability or accidents that occur at the site.  It’s also important to note that Builder’s Risk insurance doesn’t cover property belonging to other people, such as sub-contractors. 

Coverage Extensions for Builder's Risk Construction Insurance

Sometimes coverage extensions are needed or recommended, such as… 

  • Property in transit to worksite
  • Scaffolding while located at the insured location and pertaining to the insured company
  • Property in temporary storage that will be used or installed in the insured location and pertaining to the insured company
  • Debris removal that’s a result of damage caused by a covered incident
  • Valuable papers, such as site plans or blue prints.

Get the Right Construction Insurance

Contact us for Builder's Risk Construction InsuranceWhether you need general contracting insurance, contractor workers’ comp, builder’s risk insurance, or any other type of insurance, we have you covered.  We’ll take a close look at your business; recommend the right insurance for you, then (after shopping many competing insurance brands) offer you the best insurance protection at the best price.

To get started with the right contractor insurance for your business please contact us at (610) 775-3848 or (800) 947-1270

Tags: Builders Insurance, Construction Insurance, Construction Risk Insurance, Contractor Insurance, Construction Equipment Insurance, Commercial Insurance