Quoting a Carpender/contracter?

[Herkster]

Hey guys

I've got a guy that wants a quote - he does home and shed repairs, additions to existing structures, limited roofing exposure, etc.

I have markets for it but I have a coverage questions since I'm not too familiar with the product.

He currently has a BOP written, which all my carriers say excludes "your work", is that true? Is a GL policy a better fit combined with an inland marine policy for his trailer and tools that travel to job sites with him?

Any input or opinions are appreciated!

 

[Soundadvisor]

This is a tough one so you better know what you’re doing if you choose to get involved. BOP’S (Business Owner Policies) may look similar but in my experience they are not the same.

Questions which come to mind before insurance issues are even addressed include:

Does he do business personally or has he formed a separate entity (Corporation, LLC, etc.)?

Does he have significant net worth?

Does he have employees? Sub-contractors? Workers Compensation coverage?

Does he use a construction contract with his clients? What does it make him responsible for? Does it hold him harmless for anything or limit his liability in any way?

Keep in mind, if this guy is established and has significant assets, he, more than likely, has other insurance policies in his portfolio (truck insurance, a personal car, a homeowner’s policy, life, health and disability insurance). How is his other coverage structured, what limits and perils are insured, who are his current insurers?

He probably works out of his home. Does his homeowner’s policy permit a business occupancy in the dwelling? Detached structure?

What is the BOP supposed to cover? His business property? Tools? Materials? Work in progress? Injury or damage while he is working? Damage to the structure he is working on? Injury or damage which occurs after his work is completed?

What about coverage for all the work he has done in the past? Will a new insurer be willing to assume that exposure? If he changes policies and his current policy covers his prior completed operations, he will lose that coverage unless the new policy picks that up. Most carriers I know aren’t too excited about doing that.

Still feel like taking this one on?

 

[nyc2phi]

Hey guys

I've got a guy that wants a quote - he does home and shed repairs, additions to existing structures, limited roofing exposure, etc.

I have markets for it but I have a coverage questions since I'm not too familiar with the product.

He currently has a BOP written, which all my carriers say excludes "your work", is that true? Is a GL policy a better fit combined with an inland marine policy for his trailer and tools that travel to job sites with him?

Any input or opinions are appreciated!

"Your work" sounds like products and completed operations. Something like that should not be excluded for a contractor.

Contractors rates are either based off of payroll or number of employees full and part time including the owner.

Plenty of carriers that do it well just depends on your area.

 

[nyagent31]

Hey guys

I've got a guy that wants a quote - he does home and shed repairs, additions to existing structures, limited roofing exposure, etc.

I have markets for it but I have a coverage questions since I'm not too familiar with the product.

He currently has a BOP written, which all my carriers say excludes "your work", is that true? Is a GL policy a better fit combined with an inland marine policy for his trailer and tools that travel to job sites with him?

Any input or opinions are appreciated!

Not sure what state you are in but I would rather sell him a commercial general liability policy. Bops tends to be premises only policies and the work he does out on the field will not be covered. I would still ask him if he have other policies so I can get a better picture.

 

[insurance1822]

This is a tough one so you better know what you’re doing if you choose to get involved. BOP’S (Business Owner Policies) may look similar but in my experience they are not the same.

Questions which come to mind before insurance issues are even addressed include:

Does he do business personally or has he formed a separate entity (Corporation, LLC, etc.)?

Does he have significant net worth?

Does he have employees? Sub-contractors? Workers Compensation coverage?

Does he use a construction contract with his clients? What does it make him responsible for? Does it hold him harmless for anything or limit his liability in any way?

Keep in mind, if this guy is established and has significant assets, he, more than likely, has other insurance policies in his portfolio (truck insurance, a personal car, a homeowner’s policy, life, health and disability insurance). How is his other coverage structured, what limits and perils are insured, who are his current insurers?

He probably works out of his home. Does his homeowner’s policy permit a business occupancy in the dwelling? Detached structure?

What is the BOP supposed to cover? His business property? Tools? Materials? Work in progress? Injury or damage while he is working? Damage to the structure he is working on? Injury or damage which occurs after his work is completed?

What about coverage for all the work he has done in the past? Will a new insurer be willing to assume that exposure? If he changes policies and his current policy covers his prior completed operations, he will lose that coverage unless the new policy picks that up. Most carriers I know aren’t too excited about doing that.

Still feel like taking this one on?

It's an unfortunate reality..but 90% of successful agents I know couldn't answer much of that. The biggest producers I know have the least letters behind their names...

 

[Herkster]

This is a tough one so you better know what you’re doing if you choose to get involved. BOP’S (Business Owner Policies) may look similar but in my experience they are not the same.

Questions which come to mind before insurance issues are even addressed include:

Does he do business personally or has he formed a separate entity (Corporation, LLC, etc.)? No, individual with a DBA

Does he have significant net worth? Nope, small town carpenter

Does he have employees? Sub-contractors? Workers Compensation coverage? No employees, no subs, no work comp exposure

Does he use a construction contract with his clients? What does it make him responsible for? Does it hold him harmless for anything or limit his liability in any way? Nope, no agreements signed. This is in a small town, we still honor people's word and that they'll do what they are being paid for.

Keep in mind, if this guy is established and has significant assets, he, more than likely, has other insurance policies in his portfolio (truck insurance, a personal car, a homeowner’s policy, life, health and disability insurance). How is his other coverage structured, what limits and perils are insured, who are his current insurers? Carries 100/300 on autos and boat, only 100k on homeowners liability (all of which I'm quoting with increased limits). Truck will be written on a business auto policy, tools and trailer on an inland marine.

He probably works out of his home. Does his homeowner’s policy permit a business occupancy in the dwelling? Detached structure? Detached garage, still doesn't do much work at home. 99% of his business is off-premise

What is the BOP supposed to cover? His business property? Tools? Materials? Work in progress? Injury or damage while he is working? Damage to the structure he is working on? Injury or damage which occurs after his work is completed? My main concern with the BOP is the lack of coverage for "your work". The verbage that I've seen in BOP policies specifically excludes "your work", which is why I don't believe it's the policy for him. He needs a CGL, it just comes with a higher premium.

What about coverage for all the work he has done in the past? Will a new insurer be willing to assume that exposure? If he changes policies and his current policy covers his prior completed operations, he will lose that coverage unless the new policy picks that up. Most carriers I know aren’t too excited about doing that. I believe I have the option to add for previous work back to 3 years, but I don't think we are going to go that route. Again, I will point out that I am in a different demographic than 90% of the people on this board. If something were to happen that was minor - water leak that damaged a floor - I would bet this prospect wouldn't even be filing a claim, he would repair at his cost.

Still feel like taking this one on?

Yes, if my other company gets back to me I should have 3 different quotes to present to him. All of which will have a CGL versus a BOP because I don't think it is covering him correctly. I will be also quoting their home, personal autos, and boat policies. I think one of our other agents is discussing life insurance options and will be covering disability coverage as well (I'm not life/health licensed yet)

Thank you for all the questions, it opens my eyes a bit more than they were before. I really appreciated you taking your time and giving me your input!

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Not sure what state you are in but I would rather sell him a commercial general liability policy. Bops tends to be premises only policies and the work he does out on the field will not be covered. I would still ask him if he have other policies so I can get a better picture.

He has a BOP and business auto policies. I have his current decs in front of me. You made a great point that the BOP is probably not going to provide any off-premises work, which is why, combined with the exclusion of "your work", I don't think he is being covered correctly.

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"Your work" sounds like products and completed operations. Something like that should not be excluded for a contractor.

Contractors rates are either based off of payroll or number of employees full and part time including the owner.

Plenty of carriers that do it well just depends on your area.

Correct, products and completed operations, which his BOP shows coverage for, however, as others have stated, I don't think that includes off-premise coverage. The GL rate will be based off of payroll, no WC exposure, he just works by himself.

 

[benk622]

I would imagine hes written on a contractor/tradesman bop which is quite common and does usually cover off-premises work.

Also the "your work" exclusion is quite common and will be in most contractor policies including a CGL policy. The main intent is to prevent the policy from becoming a warranty- if you do faulty work you are liable. You are still covered for liability created by your work, for example if you accidentally damage part of the house your not working on or someone is injured from your work.

General contractors can sometimes buy back part of the exclusion to cover faulty work by their subcontractors.

 

[Herkster]

I would imagine hes written on a contractor/tradesman bop which is quite common and does usually cover off-premises work.

Also the "your work" exclusion is quite common and will be in most contractor policies including a CGL policy. The main intent is to prevent the policy from becoming a warranty- if you do faulty work you are liable. You are still covered for liability created by your work, for example if you accidentally damage part of the house your not working on or someone is injured from your work.

General contractors can sometimes buy back part of the exclusion to cover faulty work by their subcontractors.

Thanks for the info! The policy he currently has is a contractor's BOP according to the paperwork that I have been given. Good to know, thanks again!

 

[Soundadvisor]

I understand the small town handshake philosophy, but if this guy damages the house he is working on he may be hearing from his client’s BIG CITY insurance company subrogation department and I’m not convinced his GL or BOP is going to cover damage to property in his care, custody or control.

With a contract, he might be able to limit his liability, be held harmless for damage to that part of a property he is not specifically working on or the property owner could waive subrogation to the extent they have insurance.

It is my understanding most homeowners’ policies do not cover an appurtenant structure (detached garage), which is used in whole or in part for business. I would give a lot of consideration to having this guy’s home, cars and business policies in the same company with a clear understanding his garage may house a business vehicle, business equipment, supplies and possibly occasional inventory. Otherwise he may find himself with no coverage on the garage. In fact, that may be the case now.

Good luck, I hope your efforts are successful but I doubt this one is going to be easy. I for one would not want an angry contractor looking for me.

 

[Herkster]

I understand the small town handshake philosophy, but if this guy damages the house he is working on he may be hearing from his client’s BIG CITY insurance company subrogation department and I’m not convinced his GL or BOP is going to cover damage to property in his care, custody or control.

With a contract, he might be able to limit his liability, be held harmless for damage to that part of a property he is not specifically working on or the property owner could waive subrogation to the extent they have insurance.

It is my understanding most homeowners’ policies do not cover an appurtenant structure (detached garage), which is used in whole or in part for business. I would give a lot of consideration to having this guy’s home, cars and business policies in the same company with a clear understanding his garage may house a business vehicle, business equipment, supplies and possibly occasional inventory. Otherwise he may find himself with no coverage on the garage. In fact, that may be the case now.

Good luck, I hope your efforts are successful but I doubt this one is going to be easy. I for one would not want an angry contractor looking for me.

I appreciate the kind words and information. I think you have a very valid point in bring up that the garage or appurtentant structure would probably not have coverage from a homeowners policy if used for business use.

In regards to his business vehicle being parked in it (Dodge Ram, not an actual commercial vehicle), I think that would be a pretty grey area if a claim were to arise as long as he wasn't using that garage to work on carpentery projects for his customers. I'm always sure to advise any of our farm customers or prospects that their detached garage is covered with coverage B, as long as they aren't using it for farming purposes. Which most up here have old sheds and such so the garage is typically, well, a garage.

I also apprecaite the point you made about subrogation (I worked in uninsured motorist subro for a few years) and understand the point you are making about a customers company subrogating for damages caused by the carpenter. Another good point.

I'm waiting to hear back from Acquity on their quote, I have one completed with Allied (which is where I have their personal lines policies quoted) as well. I'm still not sure what to think about his contractor's BOP that he currently has because I can't see the full policy language. It's probably wrong of me to assume that he is covered incorrectly without getting some more information or policy language in that regard.