I keep getting a lot of requests to write a blog about Artisan Contractors and their insurance needs. At the same time, I have received an overwhelming amount of the fan mail requesting that I use more examples of claims. So, this blog will have these two worlds collide- buckle up because it’s, “ARTISAN, ALSO KNOWN AS, SPECIALITY CONTRACTORS AND REAL LIFE CLAIMS TIME!”
Before we dive into the insurance needs of an artisan contractor, let’s first discuss what I mean by artisan contractor. An artisan contractor is a specialty contractor, meaning they are trained specifically for one trade. So, when I say artisan, or specialty contractor, I am talking about: electrician, heating and air conditioning, plumber, painter, drywall, and landscape, etc. These contractors differ from general contractors who are usually larger companies that will hire the specialty contractors for certain aspects of a project. Another term that I am going to use a lot is liability, or various forms of the word. An example of what liability means is, “Everyone has liability coverage in case they are found liable,” which could be interpreted as, “Everyone has the if- it- is-our-fault coverage in case they are found at fault.” In terms of insurance, liability pays out for any damages caused by you, your company, or your employees that may result in property damage or bodily injury.
As I just mentioned, this portion of your insurance policy is to protect you against any property damage or bodily injury you could be held responsible for during the normal scope of your business. Insurance companies rate your liability risk based on the size of your company and how much work you are doing in comparison to similar contractors. There are a few ways to draw similarities between companies and that is usually by total sales, revenue, number of employees, and payroll- or a combination of the four. There are some contractors that will try to lower their sales numbers to pay a cheaper insurance premium. The truth is, every policy can be audited and if you ever file a claim, not having the correct numbers calculated can result in a big penalty.
Claims example: You are a contractor and you are remodeling the top floor bathroom on a four-story condo in Northern Virginia for a family that just spent $2 million purchasing it. Your team starts to demo the current bathroom and hits the water line that they forgot to turn off. They work for hours until someone realizes there is water in the basement, four floors below. General liability claims to remove all of the water and fix anything damaged by the leak. How much insurance do you need?
Property coverage is designed to protect the business’ personal property. If you own the building that you are working out of, then you need to insure it. If you have computers, desks, and other office equipment, you need to insure them. If you use any sort of tools or heavy equipment (all contractors usually do), then you need to insure them- pretty simple right? Wrong! Property coverage is only designed for a designated location, like your office. Property coverage for business personal property ends 1,500 feet from the location. So, as soon as any of your tools or heavy equipment leaves your parking lot, your property coverage is useless. This would be a good time to call a Bridge First Insurance agent so we can make sure you are covered. Here are two examples of claims regarding property coverage:
Claims example 1: Your office location burns down, but property insurance replaces building and contents.
Claims example 2: $10,000 worth of tools are stolen from your work truck parked at a job site. Your property coverage is seemingly worthless and you end up paying $10,000 out of pocket. If you call Bridge First Insurance you will pay $0.
Commercial Auto Insurance
This is just like your personal car insurance, except it is for your business’ vehicles. It is also insuring all of your employees that drive for you. That is, if your truck has your name on it and your employee is driving so, you are legally liable for anything that happens (cautionary hiring practices hint).
Claims example: ABC contractor is headed from one job site to the other and your employee hits an 89 year-old driver and kills her. How much insurance do you need? Answer- ask the jury.
Workers Compensation Insurance
This coverage is for your employees in case they are injured on the job. Contractors tend to dislike work compensation insurance because it can seem expensive, and generally speaking, it is more expensive than all of the other insurance coverage we have discussed. The reason that work compensation is more expensive is because it is risky and there are major claims every day- not to mention the numerous fraudulent claims (side note: every insurance company has an undercover team that will go investigate major work compensation claims to see if someone is being fraudulent). Workers compensation insurance will pay out for an employee’s medical bills, their lost wages, physical therapy, and even things like settlements for long term pain and suffering.
Claims example: A contracting employee severely cuts his hand on a job site, and due to further complications, ends up losing the hand. How much insurance do you need when a 43 year-old father of two loses the ability to work with his hands? The answer- look up previous settlements in the state you live in because work compensation settles claims on a statutory basis.
This is also referred to as errors and omissions coverage or E&O. Professional liability is designed to protect you when you make an innocent mistake. In the general liability example previously mentioned, your employees didn’t mean to hit the water line that they forgot to turn off, but let’s classify that more as an accident. The best way to explain E&O coverage is through another claims example.
Claims example: An electrical contractor is rewiring all the lighting in a school. This is a $100,000 job for the electrician and he has devoted his entire crew to this one job. A month later, the school is experiencing light failures all throughout the building and discover that it was due to an error by the electrician. The school isn’t going to pay the electrician another $100,000 to fix it. They will most likely want a new electrician and have the previous one to pay for the repairs. This is where professional liability coverage steps in and provides coverage for legal fees and for any work that would have to be redone. How big is your biggest job?
This is a blanket insurance policy that sits on top of all your other insurance policies in case their limits are exhausted. While work compensation insurance will seem like the most expensive in terms of rate, umbrella insurance is the least expensive. It also provides coverage for things like legal defense that your normal general liability policy won’t pay for.
Claims example: When any of the claims examples I have already given become your worst nightmare or if you need to go to court- umbrella insurance is where you need to find protection.
If anything discussed today scares you and makes you think that your business isn’t protected, then give Bridge First Insurance a call. All of the claims mentioned in this blog are situations I have personally experienced with a past client so, I can guarantee that these things happen and if they happen to you, you will never complain about your insurance premium again.
Speak with a Bridge First Insurance Agent today! (571) 249-3857
Previously on the Blog:
Dave has accumulated extensive knowledge of commercial insurance and the skill set that it takes to succeed. In 2013, he and co-founder Jack Cordes, joined forces to establish Bridge First Insurance. Through Bridge First Insurance, Dave utilizes his knowledge and unique expertise to offer clients the best care in insurance.