Certificates of Insurance and Cheap Insurance Quotes
Insurance is expensive. Whether Geico saves you 15% or you had a few
losses last year and your premium was increased 15%, you're probably
still thinking that insurance is too expensive. The perception of many
commercial construction insurance buyers is that if they "shop around"
their insurance, they will be able to find a cheaper rate. While this
CAN be a way to achieve your goal of getting cheaper insurance, let's
look at a few of the pitfalls of this mindset. For this example, let's
say ABC contractor is a carpenter that has been working as a sole
proprietor and up to this point has only carried Commerical General
Liability. However, he just got the opportunity to bid on a $50,000 job
and the upstream party(owner or General Contractor) is requiring that
he carry workers compensation. This insurance coverage hasn't been
necessary for any jobs he has done in the past, and whenever he needed
assistance on a job, he just called up one of his buddies and paid them
under the table for their services. Yes, we in the insurance industry
are well aware of this practice, and have a general understanding of
what type of labor is necessary to complete certain aspects of a
construction project. Anyways, so now you know you are going to have to
carry workers compensation, as well as legally pay your
helper/employee. Because you're inundated by PERSONAL insurance
marketing whenever you turn on your TV, your gut reaction is to pick up
the phone or hop on the internet to get as many quotes as you can
without ever considering whether the insurance agents and brokers you
are calling know a thing about Connecticut construction insurance. So
now you've got a few live insurance people in the phone and are getting
multiple quotes from different agents for different lines of coverage.
What happens when you need a certificate of insurance?
1. You call BOTH of your agents (because they were able to get cheap quotes, but not for both GL and Comp)
2. Both of these agents either fax, email, or snail mail the certificate to the certificate holder (now the receiving party has to coordinate the filing of multiple certs, arriving at different times. AKA a pain in the ass for the owner/GC you're working for and is PAYING you)
3. Did you read your contract? Does it require you to maintain your General Liability coverage for several years after the completion of the project. (Hint: most commercial construction contracts have this requirement) Now, for 3-7 years following the completion of this job you will be required to send certs to the certificate holder for the next few years at the time your insurance renews. Multiple agents, sending multiple certificates for multiple years is a poor risk management strategy. If you don't send these certificates, and have a complete operations claim, you will be in breach on contract and whichever insurance carrier issued your policy, is no longer required to pay your claim.
This is a reality. This kind of claim happens often. Will it be worth paying 20 grand out of YOUR pocket to save $80 dollars on your insurance policy?
If that 80$ is more important that keeping your doors open, please use the yellow pages to find coverage. If you want a policy that covers your construction company correctly and makes it easy for General Contractors and Owners to work with you, Call Us.