INSURANCE NEWS & INSIGHTS

Many commercial policies begin using estimated exposure. For example, when a Workers’ Compensation policy starts, the business may estimate: $300,000 annual payroll But at the end of the year, actual payroll may be: $450,000 The premium was originally calculated using the estimated $300,000. The insurance company may therefore calculate additional premium based on the extra…

Many Workers’ Compensation and contractor General Liability policies are auditable policies. The premium charged at the beginning of the policy term is often a deposit or estimated premium. After the policy expires, the insurance company requests actual exposure information. An audit may request: Payroll records Payroll summaries Quarterly payroll reports Tax records Profit-and-loss statements Gross…

Contractors should collect Certificates of Insurance from subcontractors before work begins. A subcontractor should generally provide evidence of applicable insurance such as: General Liability Workers’ Compensation Commercial Auto, when applicable This is especially important during insurance audits. For Workers’ Compensation assigned-risk applications, NCCI states that payroll for uninsured contractors may need to be included when…

Insurance companies frequently ask businesses for Loss Runs when quoting commercial insurance. A Loss Run is a report showing the business’s insurance claim history. It may show: Claim date Type of claim Amount paid Amount reserved Claim status Open claims Closed claims Commercial underwriters often request several years of loss history. How Loss History Affects…

Larger or qualifying Workers’ Compensation accounts may receive an Experience Modification Factor, commonly called: Experience Mod MOD EMR Experience Rating It compares an employer’s actual loss experience with the expected losses of similar businesses. NCCI describes experience rating as a program using an employer’s actual incurred losses compared with expected losses for similarly classified employers.…

Two contractors with similar payroll can receive very different premiums. Insurance companies may consider: Type of work Payroll Sales Years in business Claims history Experience Modification Employee experience Subcontractor use Percentage of subcontracted work Residential vs. commercial work New construction vs. remodeling Maximum project size Work at heights Roofing exposure Excavation Demolition Hot work Welding…

A common contractor General Liability structure is: $1,000,000 Each Occurrence $2,000,000 General Aggregate $2,000,000 Products / Completed Operations Aggregate However, required limits vary by contract, customer, landlord, general contractor, project, and insurance company. Higher limits may be required.

Contractors are frequently required to add another party as an Additional Insured. Examples include: General contractor Property owner Developer Landlord Project owner Additional Insured status is usually provided through a policy endorsement. A Certificate of Insurance by itself does not necessarily provide Additional Insured coverage. The actual endorsement matters.

Some contracts require a Waiver of Subrogation. This is an endorsement affecting the insurer’s ability to recover certain claim payments from another party. It may be requested on: General Liability Workers’ Compensation Commercial Auto Do not assume it is automatically included. Check the policy and contract requirements.

Some construction contracts require the contractor’s insurance to apply on a Primary and Noncontributory basis. This generally concerns how insurance responds when more than one policy could potentially cover the same loss. It normally requires an applicable endorsement.