How do contractor liability insurance policies work?

4 years ago

We're working with a contractor on a bathroom reno. in our apt and it turns out his insurance doesn't meet the building's requirements. They're asking him to increase levels of coverage. He said he would do it, but I'd have to pay the difference. I guess that's okay (?) but I really have no idea how these policies work. Are they 12 month policies or can carriers increase limits by the job or for shorter periods? I thought it would be quick, but he's estimating a couple weeks to get a quote and then get the new policy in place... is that normal? my wife says in her job they ask vendors to do this all the time and it takes a couple days, but maybe those are bigger companies or something. Anyway, since I'm paying for his coverage, possibly for a year, I figured it makes sense to learn how it works--anyone know about this kind of thing? Any advice?

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Comments (3)

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Joseph Corlett, LLC
4 years ago
As a contractor, you go thirty years without a claim. One is filed, the insurance company tells you they won't drop you, then they do. Your new rates, if you can get insurance, are much higher. I damn near retired over this.

To answer your question, it's a simple matter to increase coverage and pay a higher premium.
Helen
4 years ago
Your contractor should have been able to get the increase almost immediately so perhaps he is stalling for some other reason.

You should get your GC to name you as an additional insured on the policy and also get a copy of his Workman's Comp policy.

You should also talk to your own insurance company and get an umbrella policy. These are relatively inexpensive because they kick in after you have exceeded liability claims for auto and homeowner's insurance in the event you are hit with a million dollar claim. I think I paid about $125 for my umbrella policy - but you need to have sufficient regular insurance coverage.

I also state this because you say you live in a building. If any kind of plumbing issues can flood your neighbors, the liability is potentially enormous. My crazy neighbor flooded all the units below him. People have had to move out of their units while they are repaired - bathrooms needed to be gutted - all flooring had to be replaced etc. Owners of course use their own insurance to get paid immediately but the insurance companies then will subrogate the claims and go against everyone involved with the flood.
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sam_ny
Original Author
4 years ago
Thanks Joseph and Helen. That's helpful to know about the timing. I don't know why the delay. And yes, our building, like most in the city, ask for the building and the individual owners be included in additionally insured. Our plumber also has his own insurance (and met the building's requirements), but the they're saying the GC has to have it too. Helen, that seems like a good idea re. the umbrella policy (and super reasonable, although NYC rates are no doubt the highest....). Anyway, he's being asked to raise limits from 1M to 2M on "Products Comp/Op Agg," add 1.5M for auto (currently 0), and add 3M umbrella (currently 0). I really don't have any sense of what this should cost, but I guess I'll find out.

How do contractor liability insurance policies work?

Comments (3)

Joseph Corlett, LLC

Helen

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How do contractor liability insurance policies work?

Comments (3)

Joseph Corlett, LLC

Helen

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sam_nyOriginal Author

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sam_ny
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