Contractor Insurance
General Liability premiums for residential home builders have been increasing each year. Many insurance companies have determined that providing coverage for Residential Home Builders is too risky and have abandoned the market for this class of business, making it more difficult for contractors to find reasonably priced coverage.
Part of the reason, is that courts are ruling that faulty workmanship - i.e. construction defects - is covered by the builders general liability policy making the insurance policy technically a "Warranty Policy"!
This leaves the builder liable for not only repairing the problem, but also the payment of related legal expenses. And, if the insurance company pays for the loss that payment appears on the insured's CGL loss runs, almost guaranteeing higher renewal prices.
General Liability Policies being used as "Warranty Programs" was not within the scope nor the intent of the CGL policies.
Like most forms of insurance, premiums for contractors general liability is based on historical risk for the business. Indemnity policys historically cover perils and pay upon an "occurance" or "accident", however in this case, the insurance company's have not had the opportunity to underwrite the exposure, and they have not collected premiums for this exposure, so financially, the only course of action left an insurance company is to "not offer" coverage by abandoning the market.
The bottom line is construction defect litigation is on the rise, and tends to impact the entire "chain" of those contributing to any given home or building.
Contractors need Non-Owned & Hired auto liability to cover bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles) or caused by non-owned vehicles (vehicles owned by others, including vehicles owned by your employees).
It usually does not pay for physical damage to the vehicle itself; that's covered by the owner's insurance. Although this option is sometimes available.
Whether you realize it or not, as a business owner, you at least occasionally find yourself in situations where this coverage is needed. Errands and rental situations always come up.
Examples:
- You send an employee to pick up lunch.
- While on a business trip, you rent a car.
- To impress a visiting client, you send a limo to have him picked up.
- An employee runs to pick up office supplies.
Coverage kicks in if there is an auto accident and you are sued.
You don't have to own a business vehicle to have this coverage. In most situations, coverage can be added to your general liability policy.
A bonus: If you rent cars occasionally, having hired and non-owned auto liability insurance may save you money because you can avoid buying the liability coverage from the rental company. However, we always suggest you purchase collision damage waiver (CDW) protection from them.