Working with contractors and construction companies over the past several years, we’ve been able to develop a sense for their primary insurance concerns. Below summarizes the main points and offers some insight:
- Affordable premiums – First on the list for a reason…this is always a key question for the insurance purchaser. What’s the cost? As far as determining the rate, a myriad of factors are considered, and especially for a construction company that might have had a loss or varying operations, it’s not a simple thing. The best advice I can give a construction company relates to risk control. Think through every aspect of business operation, safety training, site prep/maintenance, and ask yourself, “Would this cause the insurance company to be nervous?” If the honest answer is ‘yes’, consider how you can make improvements. As the agent, where we help is regarding relationships with insurance companies. It’s important that your agent 1) has a strong knowledge of the construction insurance marketplace [major players, which markets are performing well] and 2) strong relationships with those markets (If they don’t trust you, you won’t get favorable pricing/coverages).
- Certificate requests – Prompt and accurate delivery (including endorsement forms) – Certificates and verifying coverages is essential for contractors to do work. It’s pertinent for an agent to respond quickly to those requests, since starting a job often depends on these certs. In recent years, project owners and GC’s have started requiring the specific insurance forms and even highlighted wording as evidence of coverage. This kind of detailed analysis is time-consuming and tedious, so make sure you have an agent who’s up to the task of accurately handling these kinds of requests.
- Assistance on audits – An insurance audit can be intimidating. The insurance company sends an auditor to review sales figures, payroll, DWC forms and many other items. If you don’t have all your items in order or if you accidentally show incorrect information, the insurance company can apply a generous a additional premium or reclassify your risk in a less favorable class code. That’s all to say how important it is to have a smooth audit. Surprisingly, many agents do not accompany their insured during the audit process. Wouldn’t you want a professional to assist with something that crucial?
- Review your contracts and develop favorable wording – Your contract with your subcontractors can hold serious weight in a courtroom. In a society as litigious as ours, structuring a favorable (to you) and reasonable (to the other party) contract is very meaningful. An agent specializing in construction insurance ought to be fluent in contractual language and should be able to provide key insights as you form the subcontractor agreement.