Ask DS - Requiring a contractor to have GL policy - Options

[Blazer406]

Got a small time family owned/run contractor that we would like to get to do a major project at our camp. He comes highly recommended from multiple people that we actually know. He has been in the business for 40+ years. He doesn't advertise... and has no GC license nor does he care to get one. He apparently doesn't have a general liability policy. We have asked for that in our contract that hasn't been signed yet. Since this contactor is soo small, what are our options to make this work?

He contacted his insurance agent who gave him a $10k price which is a show stopper for this contactor on this project.

Me an one other member have "shopped" through 2 different insurance "brokers" and have come up with an estimate of $2k - $3k making some assumptions on the contractors gross income, etc.

We have one suggestion to "add" the contractor (and employees) to our own liability policy. I don't know if this is really an option or not.... so I thought I would float that out there... hoping for input.
Any ideas?

[deltadukman]

He should have his own policy. I have markets that rate it based upon his payroll, not income, that may be a little cheaper. I would require it, or get another contractor. What exactly is he doing? If he is in business and hasnt been asked to be shown a certificate, I would be worried as to the amount of work he is actually doing. I do ALOT of commercial insurance and primarily deal with contractors and it the standard these days to have a 1mil/2mil GL policy naming the project owners and additional insured's at a minimum. Are you a GC or is there a GC on the project or will he be the GC?

[Blazer406]

I am not the GC..... just the head of the building committee for our camp.

The contractor has done multiple jobs for some of the members in the camp and for people we know directly. He is the real deal....just low profile.... old-school. He doesn't even do email. Most of his employees are related to him...... for all I know.... he pays them in cash.

The job consists of stick building a custom metal building elevated off the ground (above flood plain). We took his proposal and had one of our structural engineers look everything over to see if what he was proposing would work..... it was real close... so we suggested a few minor changes.... and are ready for him to go to work.

We will finish out the insides....or sub it out as the budget allows.

[Goose]

He is not the "Real Deal"......he is a disaster waiting to happen. Does he carry workers comp? Do you realize that you will be assuming all of that liability yourself? Get a real deal "legitimate" contractor to do your work.

[ScottyLee]

why don't he take out a policy pay it, do the work then cancel it after the job? of course if he were to tell the agent this, the agent wouldn't write it but he would have a cgl policy in force and he can choose to do with it as he pleases after the job is complete...

jmo


we have a bunch of contractors in our area that don't have a cgl. been in business for a long time at that... that's normal with smaller residential contractors; just not normal with larger scale contractors...

[Blazer406]

[deltadukman]

I believe you know the answer, but you want to hear something different.

First time the contractor has done a project of this size, its on pilings(or up in the air somehow)....I may would be leary.

You know why a legitimate contractor is 50% higher? You are taking all the risk once he completes the job.

[SNOT]

[Blazer406]

[Blazer406]

[deltadukman]

Those policies are what they call "Fully Earned Premium". It's true, and most have a $5000 premium. Thats because the companies that will write a guy who has no prior coverage have been burned for this many times. It ends up costing them money and they are on the hook for a substantial amout of time for whatever project he may have comepleted during that time.

In the grand scheme of things, yall could pay it all for him. Hes covered, yall are covered, and its still half priced minus $3-$5 grand. When youre talking about a camp house, it's not that bad. If you were'nt worried about it, you wouldn't be asking. Again, like alot of things, the guys who are out trying to do right and have insurance and the propper business paperwork and documents, get thrown to the curb and the shade tree with nothing gets the job. This is somewhat a rant, but I hear it from contractors every day and I see their point.

[Deltaquack]

Why not get your own Builder's Risk policy? There are plenty that cover the people doing work for you. I did that on my house. The policy was written by Zurich. That along with your own liability policy should cover almost anything that could happen. The insurance guys on here can tell you the pros and cons of that.

[Deagle]

A builders risk wouldn't be a bad thing to have in either case. That still doesn't give the club any liability coverage though. The guy you hire may very well tell you that he won't sue you if he or one his employees gets hurt on the job. I bet the wife and kids of said worker will make no such promises though.

[Blazer406]

It is my understanding Builder's Risk only covers the structure being built if something happens during construction..... Like fire, tornado, etc.... It will pay you for the value of the structure at the time the event happening basically. It has nothing to do with an employee of the contractor falling off my roof and being hurt.... And filing a lawsuit....

We already have looked at the builders risk and will buy this coverage prior to any start of construction.

[Natty]

Deltaduckman is on point.