Nowadays in construction industry, insurance has become a necessity, and even a requirement, to run a business. Insurance gives us protection in case of a car accident, employee accident at work, fire or other incidents resulting from our activity.

Insurance policies vary in terms of not only price, but first of all in terms of coverage and endorsements.

The most important thing is that thanks to insurance we can have a peaceful sleep at night. The first step to achieve this, is to find the right agent and insurance company that will provide us with excellent conditions and reliable service for a reasonable price.

Liability Insurance
Liability insurance provides protection and compensation for third party injury resulting from our activities or damage to their property. Thus, it protects us in case someone, who is not our employee, suffers injury caused by our activity.

A typical liability policy consists of:

1. declaration page
2. policy jacket
3. endorsements
   

The policy declaration page includes the information about the company such as company’s name and address, policy’s effective and expiration dates and coverage limits that we’ve purchased. Additionally, there is a book that we receive with policy’s declaration page and that is called ‘policy jacket’. It is really important to familiarize yourself with this book, because it includes precise coverage conditions, policy’s glossary and the description of what is covered by the policy and what activities are excluded. It is also important to know all the policy’s endorsements which we receive with the policy, because they can change insurance conditions (add or remove, extend or limit coverage).

For someone who deals with such documents rarely, they can be difficult to understand, therefore, it is advisable to ask an agent for help in explaining the types of coverage.

When renewing insurance, you should also compare your last policy with the new one, since law changes over time and so do insurance contracts. In our agency it is a CSR’s and agent’s job to compare and control the changes in policy and inform our customers about them.

Furthermore, sometimes policy endorsement, that we may even not be aware of can lead to financial problems.

For instance: there is a company that deals with marble carving and polishing and installing marble countertops in their customers’ homes. They purchased liability insurance and disclosed to their agent exactly what they are doing. The description of their work was placed on the insurance declaration.  However, the policy was issued with an endorsement which excluded countertops installation in customers’ houses. If the agent did not spot this endorsement and change insurance company, his customer would not have protection for major part of his work. If something happened while installing the countertop, they would have no insurance and it could result in additional legal defense costs.

Purchasing insurance
Where should we look for the insurance, what information do we need and how much does it cost?

The agent is the person that connects customers with the insurance company. As opposed to automobile and home insurance market – where we can buy insurance directly from the insurer – insurance companies offering commercial coverage base their decision of accepting an applicant not only on the application, but also on insurance agent’s recommendation.
The agent has also the possibility of negotiating the price with the insurance company. From the moment we apply for the insurance, the agent starts discussions with insurance company that, in order to calculate the premium or to decide whether to insure the applicant at all, may require additional documents.

Apart from application we may be asked to provide the following:

• copies of our subcontractors' insurance
• certification of our previous insurance
• loss information, or
• finance documents (usually with larger construction companies).
  

After analyzing the information insurance company calculates the policy premium.

If you would like to compare the offer of two or more companies, you need to be careful, as policies underwritten by various companies can differ greatly not only when it comes to the price, but also the coverages provided.

The company we intend to talk about was founded in 1925 in Pennsylvania. It offers four insurance packages, containing more features than one standard insurance policy and traditional products such as: General Liability, Umbrella, Workers’ Compensation, commercial automobile insurance, equipment and tools insurance or home insurance.

The offer is really broad, so our agents can adjust the policy to the customer’s individual insurance needs.

The product you should pay special attention to is a Fivestar Contractor Program for small to medium size construction contractors with up to 10 full-time employees. It is an ideal program for contractors specializing in only one type of work, such as drywall installation, house-painting, electrical wiring, carpentry or masonry and doing residential and light commercial work.

The exemplary price of such insurance is $ 490 for one full-time electrician.

The package consists of the following types of coverage:

• Commercial General Liability – provides protection when for example, a rock is thrown by a landscapers’ lawnmower and injures someone walking by.
• Commercial Property Coverage – provides protection for the equipment and tools.
  

Besides, the insured can extend the coverage by adding various endorsements, such as coverage for materials and equipment that will be permanently installed into customer’s building, in case it is stolen or damaged while insured perform his operations – Installation Coverage & Voluntary Property Damage.

With this program Erie reaches out small and medium size companies, offering wide coverage for competitive prices.

Liability coverage is a fundamental form of insurance providing protection from claims arising from third party injuries occurring as a result of our activities. Therefore, serious approach to its purchasing and, with the help of a qualified agent, careful review of the insurance market is strongly advisable.