Contractors insurance: A survey of markets

Rough Notes, Jan 1998 by Clapp, Wallace L Jr

Complete insurance for contractors constitutes a wide variety of coverages not originally perceived as needed by contractors a few years ago. Pollution exposures have complicated the picture because of various federal laws governing liabilities and cleanup of our environment by the Environmental Protection Agency.

Many contractors have also taken on design capabilities which introduces an element of professional liability to the client if the design as well as workmanship becomes subject to liability. To those contractors who advise or are consultants for cleanup of asbestos or other environmental wastes on properties they are working on there is also a pollution exposure.

Because there are many different types of contractors, every insurance agent has an opportunity to write contractors insurance programs. Not all are large general contractors doing heavy construction, requiring large complex insurance programs. Some are small artisan contractors or roofers that do single tasks in residences or small commercial buildings.

Agents who solicit contractors who are just starting out prosper when the contractors business begins to expand. Liability insurance and bonds are the first needs for the young contractor. As business grows, there is a greater need for workers compensation and property insurance for construction equipment.

Artisan contractors

represent the greatest number of contractor prospects. A wide number of classes, including plumbers, electrical contractors, painting contractors, dry wall and plasterers, paper hangers, carpenters, ornamental iron workers, bricklayers and masons, tilers and floor covering contractors, work as artisans, usually on an independent basis or under subcontract of a general contractor. These artisans are mostly involved with residential property but also work as subs in larger risks and commercial buildings.

General contractors handle the bulk of heavy construction. They may be involved in building large commercial buildings, or offer a service but do not build. Examples of general and specialty contractors in this class include general contractors, demolition contractors, land graders, HVAC contractors, steel erectors, excavation contractors, bridge and tunnel construction, marine contractors, railroad construction, concrete construction, asphalt paving, street, road and highway construction, structural metal and fabrication work, scaffolding and hoisting and sprinkler contractors.

Contractors involved in environmental cleanup, such as asbestos abatement, lead abatement, petroleum tank removal, and environmental contractors represent a third group of prospects.

Markets

We have identified a number of markets for contractors insurance that have specific programs for roofers, artisan and general contractors and environmental specialists. While we realize that most contractors can purchase coverage to protect their needs through standard companies, sometimes certain classes of specialty contractors, artisans and some general contractors can be fit into special programs available in the specialty market. We are providing information to you that we have received about specialty markets in alphabetical order.

Arrowhead General Insurance Agency, Inc., 6055 Lusk Blvd., P.O. Box 85320, San Diego, CA 921865320; (619) 677-5214; fax (619) 6775222; Web site: www.arrowhead.org (Andrew Barile, CPCU, president, commercial division). This managing general agency has introduced a program through its commercial division for artisan and service contractors offering general liability, inland marine and commercial auto insurance.

Over 50 classes are eligible for coverage under this program.

The maximum

limits for general liability are $1 million/$2 million. Inland marine limits are $100,000 for scheduled equipment and $10,000 for unscheduled. Commercial auto limit is $1 million csl. The general liability, inland marine and commercial auto is written through the Clarendon Insurance Group (A-), and the standalone auto is written through Generali-U.S Branch (A).

The agency solicits risks in the entire state of California. Expansion is being researched and developed in AZ, NV, OR, TX and WA.

Atlantic Star Intermediaries, Inc., 390 N. Broadway, Jericho, NY 11753-2110; (516) 733-7400; fax (516) 681-7488 (Lynne Kensler). This underwriting manager specializes in general liability and umbrella coverage for all types of contractors. The firm has written most of the types of contractors mentioned in the above description of contractors. The firm focuses on heavy construction contractors. It writes joint ventures and owner and contractor-controlled wrap-ups also. Heavy contractors that have been written under this program include: street, road and highway construction, bridge construction, conduit contractors, railroad construction, utility construction, marine contractors, steel erectors, grading and paving construction, concrete construction, excavation and tunneling.

There are virtually no excluded risks because each risk is based on its own merits. Limits for contractors equipment/property/builders risk coverage range up to $150 million.