Five things Contractors Need to Consider
- Insurance Carrier – What insurance carrier is my agent/broker proposing that I purchase my insurance coverage with? Does the carrier offer me all the coverages that I need as a contractor? Is the carrier Financially Stable? Will they be able to pay my claims?
- Labor Law Coverage – This is a buzz word now in the industry. Labor law claims are some of the most costly claims that an Insurance Company will pay out on and a contractor MUST have this coverage in place ESPECIALLY if they hire subcontractors. A contractor needs to know that the insurance they are purchasing HAS coverage for labor law claims.
- Subcontractor Agreements and Risk Transfer/Hold Harmless & Indemnification Agreements – Every contractor has encountered these and a Contractor needs to consider how an insurance company views their Risk Transfer Procedures. A weak risk transfer or sub agreement may preclude an insurance company from quoting the business. Consider the strength of your risk transfer agreements by having your legal counsel review and make recommendations. A reputable Insurance carrier will require a strong risk transfer agreement when contractors hire subcontractors. Also, Hold Harmless & Indemnification Agreements need to be reviewed by legal counsel.
- Certificates/ Proof of Insurance – who issues? Carrier? Agent? Can I get my proof of coverage in a timely fashion?
- Insurance Cost vs. Insurance Coverage – Contractors want to remain profitable, but the price of insurance versus the coverage you get must be considered carefully. Don’t cut corners on coverage just to reduce your cost of insurance. In the end missing coverage like Labor Law Coverage can result in large un-insured losses that incur out of pocket payments.