Just like you prep a job site, you must do work to ensure your insurance coverage is right. If you make an ill-informed or hasty decision, you could face insurance losses that cut into your bottom line. Before starting another big project, learn three simple ways to reduce losses on insurance coverage.
3 Ways to Limit Insurance Loss
1) Examine Insurance Certificates
First, you should require everyone on your project to provide certificates that prove they have the necessary insurance coverages. These certificates will tell you vital information about insurance carriers and coverage limits.
If you hire subcontractors, you should be careful about the type and quality of their insurance. Since many subcontractors skimp on insurance to cut costs, you might want to require specific types of coverage, exclusions and coverage limits for those applying to work with you.
You should also collect and review contractors’ policies to better protect all involved parties, such as the developer and owner.
2) Hold Subcontractors Responsible
There are often fewer problems in construction projects when subcontractors are held accountable to written contractual agreements. These documents are a good way to set guidelines and settle disagreements down the line.
A contractual agreement can be used to limit your insurance losses. For example, you could use a written agreement to hold subcontractors responsible for some portion of the deductible for any losses they cause or contribute to.
Another way you can potentially reduce losses is to require your subs to name additional insureds on their policies, so that your losses may be shifted onto their insurance policies.
3) Purchase Wrap-up Insurance
If you work on large-scale projects, you may have to monitor the insurance coverage of multiple parties. This complicated task can be simplified with a General Liability wrap-up policy. It is a type of coverage that protects the owner, general contractor and all subcontractors who are working on a big project.
General Liability wrap-up insurance typically provides:
- Cost savings
- Improved control of insurance coverages
- Extended/completed operations tail coverage
- Warranty/repair work coverage
- Limits dedicated to the specific project
This insurance policy can be controlled by the general contractor or the owner.
These three simple tips will help you minimize insurance loss, but in order to use them you will need to plan well before the groundbreaking.