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LIABILITY INSURANCE
You can usually bid work without liability insurance but most
often you cannot perform the work without the liability insurance.
The insurance costs vary based upon the amount of liability you
go with, ie: one million, two million, three million or more (lately
it seems that the minimum amount of insurance owners and/or general
contractors are requiring is two million).
It also varies based upon the type of work you will be doing,
the gross receipts of your company and total payroll expenses.
Typically, you will pay a down payment on your insurance and then
make 9 or 10 consecutive monthly payments. Your best bet here is
to check out several different insurance companies through various
agents, and talk to other contractors to find out which companies
they are using and how that company is performing.
Also, these insurance companies have ratings just like the bond
companies do: A++, A+, A, A-, B+, etc. Be sure that you find out
what each company's rating is while you are obtaining quotes from
various agents.
To help get you started, we've been purchasing our insurance from
Southern California Insurance Brokerage, Inc. for the past several
years. Their paperwork is always accurate and timely (very important
when requesting insurance certificates for projects you'll be doing)
and they're great people to deal with.
Click
here to view and print a business card for Southern
California Insurance Brokerage, Inc. You can also call them
at 800-900-9372. These guys are contractor specialists, you can't
go wrong!
ADMITTED VS. NON-ADMITTED
At one time I thought that it was preferable to use an insurance
company which is 'admitted' in California (as opposed to non-admitted)
but due to an e-mail I received from Hugh Thorne (Insurance Agent),
I now know that it is not always necessarily better.
Insurance companies which are California 'admitted' carriers are
required to place a certain amount of funds in to a special account,
governed by the California Insurance Guaranty Association (CIGA),
to protect policy purchasers (you) if the carrier were to go out
of business, and/or file bankruptcy, and/or just plain flake out.
Insurance companies which are not California 'admitted' carriers
do not place funds in to this special account, therefore you are
not protected by CIGA if the insurance company has problems however,
according to Hugh, sometimes new contractors with no business experience,
and/or particular types of subcontractors, may find it difficult,
if not impossible, to find an admitted carrier to write their general
liability.
Surplus lines (or non-admitted) carriers fill this "need"
for many contractors. It is the agent/broker's responsibility to
offer coverage from well respected, financially stable insurance
companies, whether they be admitted or non-admitted. Says Hugh "It
could be better to be insured by an A++, non-admitted company, than
a B+, admitted company . . . If the B+, admitted company goes 'belly-up',
CIGA would only pay up to $500,000 of a liability claim - with the
subcontractor/ contractor left, uninsured, for any additional liability.".
INSURANCE CERTIFICATES
For most every project you work on, you will be required to provide
an original 'certificate of insurance' from your insurance agent.
Some of these insurance agents excel in how quickly they supply
the certificate to your customer, and other agents do not.
Many times you cannot step foot onto a project until the general
contractor has that certificate of insurance from your agent. If
your agent makes a mistake and does not supply the certificate soon
enough, it could feasibly throw you into breach of contract with
your general contractor because you are unable to man the job when
you are supposed to because you have not provided the certificate
of insurance.
It is not unreasonable to expect that a certificate of insurance
be processed on the same business day that you have made the request,
provided you're not trying to "slip it in under the wire".
Some agents will automatically mail you a copy of the 'cert' (certificate
of insurance) at the same time that they mail an original to your
customer, but if you have a quick job you may need a copy quicker
than the postal service can deliver one to you.
A suggestion here is: when you request your agent to mail a 'cert'
to your customer, also request that the agent fax a copy to you.
The reason for this is two-fold: a) peace of mind that your request
has been processed and b) in times of urgency, general contractors
will usually accept a fax copy with your promise that an original
is in the mail to him.
Chances are that the 'cert' is being mailed if you have received
a fax copy (without the fax copy you really don't have any assurance
whether or not the certificate is being processed in a reasonable
amount of time, until and unless your general contractor and/or
owner calls you and tells you that they have not received the certificate).
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Please note that Southern California Insurance Brokerage covers California projects only.
Please tell them that TheContractorsGroup sent you. I don't currently earn a commission for referrals or sales, but I do love it everytime they're told that they're quoting someone that I sent their way. =) |
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