What Northern Jersey Artisan Contractors Absolutely Need To Know
At Friedlander Associates , we write Commercial General Liability for New Jersey artisan contractors
every day. This familiarity allows us have our hands on not only the pulse of the insurance
companies to see what changes in the marketplace are occurring, but also to know exactly what
challenges you as a contractor are facing here in New Jersey.
Generally for each niche of business we contract with a number of different companies to make sure
that we are providing the most extensive coverage at the most reasonable price. In this way, you as
contractor are protected. If changes need to be made or we need to act proactively to avoid harmful
changes in the marketplace, we are able to do so.
General Liability insurance provides protection against two types of financial loss arising out of a
lawsuit against your company. First, it covers the damage awarded to an outside party, in insurance
terms a "third party", because of injury or damage for which our insured contractor is legally
responsible for. In addition to those costs, it covers the cost of defending our insured contractor
against the charges brought against them. Simply, the legal costs to defend the suit.
"Us" Against "Them"
It's interesting the difference in the view that insurance companies and contractors take to
contractors insurance. To say that they are vastly different doesn't even begin to describe the
difference.
The insurance companies position is that they "provide a future promise to pay against a covered
loss" in exchange for an agreed upon premium. In their eyes, they have a ton of their money at
risk on the table protecting you - not only should you be thankful but you should comply timely
with all requests and recommendations.
Here is how contractors of every shape and size have told us that they see the insurance process.
You can see that it is very much an "us" against "them" type of fight. Clearly this is not how it
was drawn up but, for many contractors, insurance represents one of if not your
greatest single expense other than payroll.
Here are some of the things that I knew in my gut, but were pointed out time and time again with
real world examples.
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Contractors hate paying for insurance. It's a black hole and money pit with no end in
sight and no real return on investment if there are no claims.
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By and large, honest contractors don't want to have claims. So logic dictates that the
absolute best strategy for you is to get the absolute least expensive policy you can
find. For many contractors, nothing after they have received their Certificate of
Insurance even matters. The Certificate allows the contractor to get paid. Insurance
is simply a cost of doing business; reduce the cost, pare down the coverage: more money
in your pocket.
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In difficult economic times, some New Jersey contractors will tell their insurance
company or agent that they are an easily quantifiable job class - say carpenter - get a
certificate of insurance and then head off into the world and will sign on to do
anything and everything. I understand that this is a survival strategy but one that
comes with a minefield of problems.
Understanding Your Contractors General Liability Insurance Is Our Job
Understanding these vastly different views regarding your contractors Commercial General
Liability Insurance is our job. We help you to reduce your premiums wherever possible, while closing
all possible gaps, and making you aware of all options available to you.
In even simpler terms, contractors want everything under the sun to be covered, while paying as
little as possible for it while insurance companies want to pick and choose or in professional
terms determine what risk and what part of the risk they want, and don't want and what premium they
want for it.
Dogs and cats have nothing on this relationship. As a contractor, you truly need a New Jersey
contractors insurance expert to achieve the results you want at the most reasonable cost.
A Real Life Example
A contractor calls in for a General Liability policy for a one-man carpentry operation. During the
discussion the potential client and my specialist talk about not only the insurance requirements, but
also about life as a New Jersey contractor - one is a contractor - one deals with contractors every
day. It's an easy conversation. They agree upon a price and payment options and then go through the
application. The question then comes "Do you do any roofing?" - Answer no.
Because we are contractors specialists and have real world knowledge about contractors, the questions
go a little further. The specialist asks the contractor that if you are doing a residential
addition, who does the roofing of the addition? Silence. "Well I would," replied the contractor.
Our representative, because he sees both sides of the field, comes back and says that he has talked
to the underwriter at the insurance company previously about this situation and will notate on the
application, send her an email, and then scan both the application and email and archive it so it
can never be lost.
Who cares? In the beginning of time when life was simple and pure or at least less complicated
than it is today, insurance contracts were straightforward and easily understood documents. But,
the policies have gotten more and more complex due to one pervasive fact: Insurance companies get
pulled into court to defend claims under policies that they never intended the policy to pay for.
Each time this happens, the policy writers go back to the drawing board and further restrict the
language.
So what? Under the example I just gave, the question about roofing (when answered "No") triggers a
policy exclusion for roofing. No coverage of any type. Now if a claim arises - the simple "No"
answer has put the client in a position where everything is now at risk, and the attorneys that
the insured company would have had to pay for to defend this claim are now sending their bill
directly to the insured.
Instead by having an intricate knowledge of the insurance side - what the underwriter was thinking
and how she would respond and because they had discussed the situation with both knowledge and
logic all parties were able to reach a point where the contractor was adequately protected and the
insurance company was comfortable with the nature of the risk.
Why You Need a New Jersey Contractor Insurance Expert
Insuring contractors is a specialty niche within the overall scope of insurance. What matters is
knowing what each form of the policy says, what are the real world ramifications to certain
endorsements or certain exclusions, and most importantly how to navigate these traps while
delivering the coverage that New Jersey contractors need while avoiding the traps that are part of
the landscape in New Jersey Contractors Insurance.
What Other New Jersey Agents May Not Tell You
Part of your Commercial General Liability policy is a section entitled "Products & Completed
Operations". You will see a coverage amount for any one claim and then for an annual aggregate. The
aggregate is usually double the limit for the occurrence and simply places a maximum or cap on how
much the insurance carrier will pay in any one policy period.
Products and Completed Operations is simply - Done Deal coverage. An example makes it easier to
understand: Let's say I hire your company to build a deck on my house. While you are there you
have coverage under your general liability policy. Once the deck is done and you move onto another
project - you have now entered the area of "Products & Completed Operations". The deck is done. It
is a completed operation. Let's say the deck falls 5 years later due to an error in your work.
Who pays for that loss? The insurance company you had when you built the deck? Nope.
The insurance company that you have at that time gets the loss. In other words the insurance company
you have 5 years after you built the deck is now defending you.
What happens if you retire or change careers? Unless properly handled you have a big heaping pile
of financial mess.
Claims like this occur all the time. If you handle it wrong you could be in a financial mess with
nowhere to turn.
A New Jersey contractor General Liability Insurance specialist would certainly give you the answer
to this and provide you the correct coverage. It's called "Discontinued Operations" and it is just
another area where an expert knows what a generalist doesn't.
Call us at (908) 730-6443 or
contact us for answers to your New Jersey
Commercial General Liability Insurance questions.
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