I recently had an interesting conversation with our business insurance agent. Some of the things he told me were an eye opener from my own standpoint as a homeowner, not just as a roofing contractor.
It started with doing a regular review of the coverage that Harvey Roofing & Construction has within our own contractor insurance policy. We highly value the protection it provides our clients and our business, so we are very in depth with maintaining and understanding the policy. It is also a large expense so each year we review the policy renewal in depth.
That lead to discussing the "competition" and what our agent often sees among other construction contractors, specifically roofing contractors...
These are the 4 key points that shocked me:
1. - He sees roofing contractors put a general liability policy into place, make the down payment and then never make the first required monthly payment. So obviously the insurance policy cancels. The contractor receives a certificate upfront showing the policy coverage being for a one year term, so they provide copies of the certificate for the next year when the insurance is actually cancelled. His agency is aware of this regularly happening because homeowners that are provided certificates sometimes call to verify the insurance and they must tell them that it has been cancelled, when the homeowner was just given the certificate as proof.
2. - Many home restoration contractors buy the wrong type of policy. Roofing contractors specifically will often buy a policy that is intended to insure a roofing crew or crews. Think of it as a policy that is limited to being an actual roof installer, when in reality most roofing contractors are more of a general contractor that is utilizing subcontract labor for their roof installation projects. This leads to major gaps in coverage and could in essence mean the policy provides no real coverage at all.
3. - Dealing with roof replacement projects involves tearing off old roofs as part of the project. While the roof is torn off it is considered an open roof. Even if you still have the roof decking covering the home it's considered an open roof until the new roof installation is complete. Coverage for this portion of the job is absent from many liability policies issued to roofing contractors. If a huge unexpected storm rolls in while your roof is torn off and rain leaks into your home there will be no insurance coverage backing the water damage that may occur. I was told their agency always offers the added open roof endorsement for coverage, but that it is often declined because the contractor doesn't want to pay the extra premium.
4. - Contract labor isn't covered on a standard general liability policy. The expectation would have to be that the installers or subcontractor have their own general liability insurance. The fact is very few roof installation crews have their own insurance. I have actually never come across one that did. This creates the need for the roofing or general contractor's general liability to also include an endorsement to provide coverage for contract labor performed by subcontractors or others. Those considered to be a subcontractor could be the actual roof installation crew, the rain gutter installer, etc.
It made me realize how imperative it is to verify a contractor's insurance. Just being given a certificate of insurance isn't really any protection. You have to ensure that the policy is in good standing. This requires calling the insurance agent and requesting them to confirm that the coverage is in fact in force.
We offer our customers the ability to receive an insurance certificate with them listed as the certificate holder and additional insured. This provides not only the policy and contact information needed to verify for yourself, but it also guarantees you will be notified if the policy is ever at risk of lapsing. The additional insured designation gives the added benefit of actually being a named insured on the policy for the duration of your contracted project.
Found this so interesting that I had to share!
- Harvey Braden III
Harvey Roofing & Construction
Any other thoughts or had an experience with this type of situation?
Leave a comment!