Contractors Insurance: The Importance of Additional Endorsements

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.

Ongoing Operations

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 Operations

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.