Owners and Contractors’ Protective Liability Coverage – offers protection against liability for bodily injury resulting from the work of independent contractors hired by a named insured. The contractor purchases the policy to protect the client (project owner) from vicarious liability in connection with work performed on the project. As part of its oversight of the contractor’s operations, the OCP policy also covers the insured for liability arising from its own acts and omissions.
Many construction contracts require contractors to sign pages containing detailed insurance requirements, coverages, and minimum dollar amounts. Review any contract’s insurance requirements carefully before signing to ensure that your current insurance complies with the contract’s requirements, including coverage types and financial limits. Your contractor insurance specialist is a great resource for help in this regard, if you are in doubt.
A common request is for owners to be added to a general contractor’s policy covering commercial general liability (CGL). Subcontractors are often required to name their general contractors as additional insureds on their general liability, business auto, workers compensation and umbrella and or excess policies.
So, what is an “additional insured”? Additional insureds are anyone who is covered by the primary insured’s insurance policy, but not the primary insured. If someone wants to be added to someone else’s policy, how does that work?
To obtain additional insured status, the insurance company must issue an endorsement to the primary named insured’s policy.
It is the wording of the endorsement that determines the scope of an additional insured’s coverage. A certificate of insurance cannot grant additional insured status, although certificates are often presented as proof of additional insured status. As proof of coverage, an additional insured endorsement must be attached to the certificate of liability insurance.
In the event that additional insured status is properly obtained, the additional insured is entitled to a wide range of important rights. A claim may be filed directly against an insurance company by an additional insured. This right entitles an individual to either legal defense against third-party claims, or to coverage for damages caused. Furthermore, by retaining the loss off of their own loss history, the additional insured may be able to prevent price increases in the future.
Please check with your contractor insurance specialist if you receive a request to add someone else as an additional insured on one of your policies. The status of additional insured is important for the construction industry, but care must be taken to ensure that this status is granted correctly.
However cautious you may be when carrying out your projects, mishaps and accidents can still occur. This is an indeterminate situation that is beyond your control. You can’t always rely on your people and equipment to perform perfectly. If you are legally obligated to cover accident and machine expenses, it will cause delays and income reduction for you as the contractor. Liability insurance for contractors is undoubtedly the safest way to prevent financial ruin. In a nutshell, an insurance policy for contractors covers all third-party claims. Any damages or accidents that occur on your business site can also lead to lawsuits and complaints from clients and other parties. You and employees under your supervision are covered when claims are made against the insurance. A contractor is a business manager and a contractor. The construction site requires many employees to work. Some of these individuals are also expected to commute and work across multiple job sites. The possibility of these people being involved in an accident or causing one to a passerby is thus high. Typically, contractors have liability insurance to cover Property damage and bodily injury. A person may sue a contractor if he or she suffers an injury or damage to their property. Completing operations and products and Advertising injuries and personal injuries: Libel, slander, and false claims may result in damages. In addition to other types of insurance coverage, contractor liability insurance is a must-have for any contractor.
To obtain a contractor liability insurance quote, please contact www.safeproins.com
Contractors can’t ignore the importance of financial protection, no matter what sector they work in. You will also be protected from lawsuits and damages if you have a contractor’s insurance policy.
Here’s how it works
The purpose of contractor insurance is to provide financial protection to your business if it is involved in an accident or a peril that causes financial loss. An insurance policy is an agreement between a firm/individual and an insurer. A specific premium amount will be charged as the price of insurance coverage, which you will receive from the insurer if damages occur. In essence, you’ll be able to choose what kinds of coverage you want to protect, which will depend on your preferences, budget, and needs. Depending on the terms outlined by the signed contract, financial coverage will be provided.
Contractors are sometimes required to show proof of insurance and enlist the client as additional insured on their commercial general liability policies. It is common for a certificate of insurance to accompany an endorsement as evidence of coverage.
An additional insured endorsement can be obtained by contractors
Aside from the requirements, restrictions and complexities that come with every insurance policy, getting an additional endorsement also has its own peculiarities.
As a first step, you need to define who you want to include in the endorsements. You can add an additional insured either as an individual or as an organization. Depending on the purpose of the additional endorsement, the wording may differ. It can be obtained for ongoing or completed operations.
BLANKET ADDITIONAL INSURED ENDORSEMENT
A blanket additional insured endorsement, also called an automatic endorsement, allows for a contract to automatically include those entities and individuals as AIs.
Contractors must comply with laws specific to each state in the United States. Contractors State License Board (CLSB) of the Department of Consumer Affairs handles this responsibility in California. In addition to providing administrative services to contractors and clients, the board is responsible for investigating complaints.
Licensing requirements for California contractors
License requirements for becoming a contractor in California include:
- Be at least 18 years of age
- Be a U.S. citizen or legal resident
- Provide passport photographs
- Hold a $15,000 worth of bond
Is there a need for a license?
The CLSB requires licensing for any project (materials and labor) that costs $5,000 or more. It refers to the construction or modification of any structure, including buildings, roads, highways, parking lots, excavations, and railroads. All contractors and subcontractors, as well as anyone engaged in business, must comply with the regulation. Prior to submitting a bid for a job in this state, it is essential to fulfil this requirement.
Working without a license carries penalties
In California, operating as an unlicensed contractor is a criminal offense. Any offender can be prosecuted criminally or civilly. Contracting work for jobs worth $500 or more, or presenting yourself as a contractor for jobs worth that amount will result in legal or criminal action.
DESCRIPTION OF THE FIRST OFFENCE:
A fine of $500 and/or up to six months in jail is the most common punishment for this. A fine of $200 to $15,000 may also be imposed depending on the outcome of the investigation.
VIOLATIONS SUBSEQUENT TO ORIGINAL VIOLATIONS
Following a second conviction, the fine could increase to 20% of the total project price, or $4,500. An offender in this category must serve a minimum of 90 days in jail.
To avoid a setback for your business, it is strongly recommended that you get the license. You may also lose sight of your long-term plans through the consequences.
In case I do not meet the eligibility requirements, what do I do?
A person captured on the CSLB’s records who meets the requirements for a license may qualify for a license if they do not meet the California licensing requirements for contractors.
Using my California Contractors License in another state is possible?
Nevada, Utah, and Arizona have reciprocal contractor license agreements with California. When working in any of these states with a CSLB license, you will have a better chance of landing the job than if you were working in another state. While some of the requirements in the license examination are removed, you still may not be eligible to work with those state’s licenses.
Due to this advantage, the bidding process will be sped up as you get the chance to complete it ahead of your competitors. The requirements for some examinations may also be waived. There are some classifications of California contractor licenses where reciprocity agreements do not apply. Several, similar classifications are eligible for this award. Landscape license codes A-21 and C-27 from Arizona, respectively, will be accepted as equals. The contract will not be authorized if it does not follow the accepted code.
Contact CA Contractor State License Board for most updated information.
Each of the 50 states in the United States has its own laws that contractors must comply with. In California State, the Department of Consumer Affairs, Contractors States License Board (CLSB) is saddled with this responsibility. The board is also responsible for administrative services to contractors and their clients and investigating related complaints.
California Contractor License Requirements
To become a licensed contractor in the Golden State, you will need to:
- Be at least 18 years of age
- Be a U.S. citizen or legal resident
- Provide passport photographs
- Hold a $15,000 worth of bond
Who Needs the License?
According to the CLSB, becoming licensed is a must if you are to work on a project with the total cost (materials and labor) of $500 and above. This involves all businesses or individuals who construct or alter any structure, such as building, road, highway, parking facility, excavation, or railroad. The requirement applies to contractors, specialty contractors, subcontractors, and anyone engaged in the business. It is a major prerequisite that must be fulfilled before you can submit a bid for a project within the state.
Penalties for Working Without a License
Being an unlicensed contractor is a gross violation of the California state law. It can lead to criminal or civil actions against any offender. If you are caught contracting jobs or advertizing yourself as a contractor for jobs worth $500 and above, the CSLB will initiate legal or criminal action against you up in the following ways:
This is usually treated as a misdemeanor, carrying a possible sentence of up to 6 months in jail and/or a fine of $500. Depending on the outcome of the investigation, it can also attract a potential administrative fine $200 to $15,000.
Subsequent convictions will increase the penalties, which could cost a fine of 20% of the total price of the project done, or a $4,500 fine. Such an offender shall also be confined to jail for at least 90 days.
It is, therefore, highly recommended to get the license and avoid legal actions that could lead to a setback for your business. The consequences can also ruin your overall trajectory and long-term projection.
What if I Don’t Meet the Requirements for a License?
If you do not meet the California licensing requirements for contractors, you may qualify for a license under a “qualifier.” A qualifier, according to CSLB, is a person captured on the board’s records who meets the requirements for a license.
Can I Work in Another State With California Contractors License?
California has contractor license reciprocity with Utah, Arizona, and the Nevada States. If you are to work in any of these states with CSLB license, or vice versa, you stand a higher chance of landing the job than in other states. This doesn’t automatically guarantee you the right to work contract with those state’s license, but it removes some of the requirements in the license examination.
The advantage will help fast-track the bidding process as you get to complete the whole process ahead of other potential competitors. You might also qualify for a waiver for some of the examination requirements. Bear in mind that reciprocity agreement doesn’t work in all classifications of California contractor license. It is awarded only in specified, similar classifications. For example, Arizona license code A-21 for landscaping will be accepted as equal to California landscaping license code C-27. Any contract outside the accepted code will not be authorized.
It does not matter which sector you operate in as a contractor, the need for financial protection cannot be overemphasized. Apart from meeting the requirements of the law, having a contractor’s insurance policy will help protect you against liability from damages and lawsuit.
How Does It Work
Contractor insurance primarily serves as a risk management tool that gives financial protection when your business is involved in peril or accident that causes financial loss. It is a contract between a firm and an insurance company. You will be charged a specified premium amount as the cost for the financial coverage, which will be provided by the insurance company in the eventuality of damages. You will have the liberty to choose the kinds of disasters or accidents you would want protection for, which will basically depend on your needs, budget, and/or preferences. The financial coverage will be offered according to the dictates of the contract signed.
Additional Insured Endorsements for Contractors
In most cases, basic contractor insurance policies don’t offer robust coverage that will best serve policyholders’ business interests. There are some projects you will need to subcontract, and would like to have coverage for as many subcontractors working with you. Your basic contractor insurance will not cover those subcontractors; hence, the need for additional endorsements to fill the vacuum.
How to Get Additional Endorsement
Just like every other insurance policy, getting additional endorsement comes with certain requirements, restrictions and complications, which must be understood from the onset.
To start with, you will need to define those you want to add in the endorsements clearly. The added insured can be an individual or an organization. There are different languages for additional endorsements for different purposes. You may get it for ongoing operation or completed operation.
The language (terms and conditions) of an ongoing operation will be amended to accommodate the added insured individual or organization in the “WHO IS INSURED” definition of the contract. It will only address liability or loss arising from ongoing operations caused by the named entities.
Completed operation option provides coverage against liability, loss, or injury to a third party once the contracted operation ceases. It is a crucial financial tool that provides relieves and helps you maintain stability in your business. Take, for instance, a roofing project you completed six months ago started linking, and you are sued by the property owner. Instead of dolling out repair cost from your pocket, your completed operation additional endorsement will come to your rescue.
If any lawsuit emanates from the contract, court judgment will be based within the scope of the language in the contractual agreement. It is therefore essential to understand the terms of a policy to the letter.
Blanket Additional Insured Endorsement
Also known as an automatic endorsement – blanket additional insured endorsement is designed to automatically accommodate those entities or individuals that were not initially named in the agreement.
Who Needs Additional Insured Endorsement?
An additional insured endorsement is a must-have debt management tool for every small, medium, and large scale contractor in the United States. Having it will help save your business from distress and bankruptcy resulting from a lawsuit.
Contractor Insurance a Beneficial Necessity
Contractor insurance is an extremely important protection for many professionals who make their living through contracted building and development work. Along with general contractors, other professionals that rely on the protection offered by contractors insurance include: Builders, developers, trade and artisan contractors who specialize in such processes as carpentry, plumbing, masonry, electrical, concrete, roofing, HVAC and more. Many contractors have been saved from business and financial ruin because of the protection afforded to them from some form of insurance.
The best avenue to find the most advantageous contractors insurance products is insurance specialists who are experts in these types of products. The good news for prospects is that most of the top providers of contractor insurance products are accessible online. Online specialists provide an extremely effective and efficient way to learn about the best insurance products. Agencies that specialize in these contractors insurance products also offer the most cost-effective solutions because of their ability to put together customized solutions that offer the coverage clients need, without the excess costs they do not need.
As one of the largest states in terms of building and new construction development, California is a hot bed of building contractors. This means that with all of the contractors working, there is a huge demand for contractor insurance protection at an affordable cost. The good news for these contractors is that there are opportunities to find honest and dependable specialized insurance carriers that offer protection required in California.
The coverage a contractor needs is dependent on the type of work he or she engages in as well as the risks associated and protection desired. The general purpose of contractor insurance is to provide financial backing for a contractor who is liable to a client who hires the contractor to perform a certain job. The most purchased type of contractors insurance is general liability insurance. As with other types of insurance, contractor general liability offers the widest protection and is most useful to a company or individual engaged any many facets of contract work. There are maximum payouts on the insurance, generally $1 million to $2 million for each type of protection. Contractors protected by a good plan are usually secured against reasonable financial loss due to problems linked to the contractors work. The most complete protection can be found from adding some more specific types of coverage to the general liability protection. The good news for contractors in California is that there are contractors insurance specialists such as us who offer great California contractor general liability insurance plans.
Worker’s compensation is a common contractor insurance purchased by many contracting companies for their employees. Workers comp insurance is a compulsory type of coverage. This protection helps the employer cover the financial burden of an employee who is injured on a job. The workers compensation insurance generally offers income, medical and rehabilitation benefits for injured employees involved in work related accidents. Some plans also include a death benefit payable to survivors.
Inland marine insurance is another specialized type of contractor insurance. This contractors insurance protects goods that are in transit over land. Many contractors move materials and goods routinely and this allows them to expect the high costs of those items. Tools, equipment and installation floaters are all considered inland marine insurance and are considered essential types of insurance for contractor.
Disability insurance is another common type of contractors insurance used by contractors and many companies, for that matter. This provides for the income needs of people displaced from work for a period of time due to injury. It is commonly referred to “Accident and Health Protection”. Health and life insurance are other types of coverage purchased by contractors.
Another common type of protection for contractor is surety bonds. A surety bond is a financial instrument not an insurance policy. A Surety Bond is a financial instrument utilized to guarantee performance. A building developer hires a general contractor and the contractor is unable to perform on his obligation to complete a building on time or as agreed, developer may look to sue contractor for not performing as promised. A performance bond provides protection for this type of exposures. License and permit bonds are required by the cities, municipalities or state. It guarantees compliance with the local, state, or federal codes. Another reason for requiring a license bond is to provide protection to the consumers. Along with contractor workers comp insurance, California contractors are required to have contractor license bonds.
It is quite obvious that companies and individuals that are involved in building development need to protect themselves from huge financial liability. Even small operations need adequate protection as a company need not be large to be a target of a builder looking for retribution. Many companies hire top contracting talent by promoting the excellent liability and contractor protection they maintain. Contracting work is often challenging and sometimes dangerous. It is important for workers to know they will be taken care if injured in the line of duty.
Contractors that either want more complete protection are want protection more customized to their limited needs might opt for other types of contractors insurance.
Contractors Liability Insurance
A combination of skills, licenses and adequate business insurance gives your company an edge among your competitors and makes you more credible and reliable to prospective clients.
Additionally, as a contractor, your company is exposed to potential damages and lawsuits that may send you out of business if you lack a stable financial safety net. Contractor liability insurance provides protection against adverse economic effects of unforeseen circumstances that could slow your business down. Some of the risks covered include damages to physical assets, work-related and third-party injury claims like medical expenses as well as funeral cost.
Types of Contractors Liability Insurance
Many contractor liability insurance products are sold standalone, depending on the insurer. You may get any of the following from most insurers in the business insurance market:
Contractors General Liability Insurance
General liability coverage covers your company against third-party claims as a result of bodily injury or damage to someone’s property caused by your company. The policy doesn’t protect your own property.
Contractors Workers’ Compensation
Every state has a law that requires a business owner to partly or wholly provide the medical bills of employee’s work-related accidents and illnesses. This is the essence of workers compensation. The product also covers your employees’ lost wages, rehabilitation cost, and death benefit to the families of workers who die on the job. Most workers compensation insurance policies also offer employers liability insurance.
Contractors Commercial Auto Insurance
Commercial auto insurance covers any damage done to or caused by vehicles used for business. The policy has four types of products, which are:
- Auto liability: This covers bodily injury or property damage caused by your vehicle
- Uninsured motorist coverage: This covers damage to your vehicle caused by an uninsured vehicle, i.e. if the person who hits your vehicle isn’t insured
- Medical damage coverage: This product covers medical bills if you or any passenger in the vehicle is injured. It doesn’t matter if the fault was from you or someone else.
- Physical damage coverage: This provides coverage if your vehicle is damaged by something other than an accident.
Contractors Professional Liability Insurance
It is also known as professional indemnity insurance. If any of your clients suffers financial loss as a result of your company’s negligence or errors, you will be covered by this product. Professional liability is very important for businesses operating as service providers. Commercial General Liability policies excludes coverage for contractors professional liability coverage.
Contractor’s Equipment Insurance
The policy covers the operational tools and machinery owned or rented by your business, so long it is in your possession. The covered equipment will be protected against perils, such as vandalism, theft, flood and fire. The coverage isn’t tied to a specific location, as it also covers mobile machinery, such as forklifts, trailers and inland marine. Contractor’s equipment insurance is inevitable for construction contractors.
What to Consider When Buying Contractors Liability Insurance
Every business has its own uniqueness, and as such will require a customized coverage. Your contractor insurance should be in line with the common events in your line of work. Additionally, priority for a product should be considered based on the level of risk. For instance, there will be a major difference in workers’ compensation policy needs between your office employees and field employees, because the odds for work-related injuries for the latter are higher. Above all, speaking to an experienced insurance broker will help you make the right decision. We at Safepro Insurance Services are ready to assist you.