subject: Contractors Insurance Coverage Limitations: Stay Alert [print this page] It will be bit harsh to say this but it's pretty true: the economic climate is getting more hostile for remodeling contractors. And it has become highly important to save money on contractors' insurance coverage. But having said that, one needs to be really watchful while purchasing business insurance contractors. One should know what he/she is getting deprived of in order to get that low price. Business insurance brokers use scores of ways to cut down the cost of your contractor's insurance. However, they are also working on reducing coverage and subsequently the level of coverage that your business has against claims for property damage, bodily injury or defect in construction.
This article basically deals with the much-talked about sunset clause, the manifestation clause ad the money saving risk retention group policy. These three choices, as you already know, are considered as perfect source to save on lot of money. But the fact is that the saving is very temporary and that one must foresee the loss to the overall business. The bad luck is that some insurance brokers are up to selling anything which may not be very useful for you, just to get their sales target met. That is really disappointing trend. It's strongly suggested that you should consult your insurance broker in case the policy you plan to purchase is comprised of these clauses or is being offered by a risk retention group.
Let's begin with the sunset clause. The clause limits the time of filing a claim after the expiry of the policy. Say, a general contractor owns liability over his business for a decade after the project is completed. The sunset clause will limit the period to file a claim. The limitations vary company to company. Thus a policy with a three year sunset clause would limit the insurer's liability to the said amount of period. But you should not misinterpret that contractor is absolved of the liability of the remaining year term. The contractor is still liable irrespective of deal he/struck with the insurance providing company.
The manifestation clause is considered even harsher as it limits claims that are to be filed within the year of policy or relatively shorter time. The manifestation clause suggests that loss being claimed had to have manifested itself or shown itself to the average person during the tenure of policy. In case the damage/loss isn't seen or noticed during the stipulated period, the claim will not be covered. And this leaves the contractor stranded for any damages that he might be liable for.
These two clauses can be placed separately or together. Separately used or together the insurance company puts a cap on their liability, which later turns out to be futile. And the insurance sum is also not very impressive enough to shell out some percentage of the annual premium.
The third and very dangerous risk is that insurance brokers sneak one over on the client in an endeavor to bag the least quote possible. And you may end up a deal with risk retention groups, which can be a counterproductive measure. Such risk retention groups cannot be trusted at all and one must be highly careful while dealing with them.
The best solution to ward off risks is education about the policies and understanding of the minutest tricks of the insurance field. An educated customer is an empowered customer and never ends up with a wrong deal. Money is a huge asset one should make sure everything is in place while investing it.
