The Nuts and Bolts of Contractors Insurance

Are you a general contractor, contractor, or subcontractor? Or do you hire them? If so, you need to understand contractors insurance.

Typically, contractors insurance will come into play if a business focuses on one or more of the following: construction, carpentry, plumbing, cleaning, electrical work, landscaping, painting, snow removal, and more.

These categories cover a wide range of businesses and needs. Since every business is different, insurance options range from standard policies to a mix of appropriate coverages. However, some issues are common to almost every contractor, including:

  • Bodily injury and property damage: Many contractors work with heavy machinery and tools. If you do, or you hire workers who do, you should be concerned with potential accidents related to your equipment.
  • Product liabilities: If you deliver a product or serve food, you must consider potential injuries to those recipients, and illness.
  • Medical and disability: In addition to the safety of others, it’s also important to consider an owner’s own health. An owner needs coverage in case of becoming ill or being injured.
  • Errors and omissions: If you provide consulting advice, such as that provided by landscapers or others, you risk liability. Coverage is needed in case a client experiences loss as a result of the advice.

To cover each of these areas, companies will need an appropriate bundle of policies that meet the specific needs of the operations. Options include:

  • General liability: This is the standard that everyone needs. It covers bodily injury and property damage. For medical costs, it covers anyone injured during the course of the work. For property costs, it includes the project contractors are working on plus third-party claims.
  • Completed operations/products: This covers any products sold or distributed, as well as any issues caused on a completed project.
  • Contract liability: This policy provides coverage in the case of a contract dispute. It may or may not be included with general liability coverage.
  • Commercial vehicle: If vehicles are used in the business, companies need this coverage for asset protection, as well as providing coverage for accidents.
  • Workers’ compensation: The regulations for workers’ compensation vary by region. In the case of solo contractors, it’s likely they won’t be required to carry this insurance, but it’s not guaranteed. Be sure to check with an agent about local requirements. If a company has employees, this coverage is needed to protect workers from injury, illness, or death. It provides for employees if they must miss work and for the contractor in case of an employee lawsuit.
  • Professional liability: This is also known as errors and omission insurance. It protects the contractor in the event of an error that causes a client financial loss. It covers legal defense and settlements.

It’s common for businesses to change and grow. Contracting businesses can be particularly dynamic. As companies expand and develop, they need to maintain communication with their agents. Company owners should also review policies annually to determine their needs and make any changes necessary to meet those needs.

Nonprofits: Unique Insurance Coverage for Unique Needs

What special insurance considerations does your organization have? If you are a nonprofit, the list might be lengthy. You provide unique services and therefore have unique needs. And it’s important to keep these in mind as you set up your insurance coverage. Following are several areas that nonprofits often overlook:

Cyber liability insurance: It can be tempting to assume only for-profit businesses are at risk from cybercrime, but this can be a costly assumption. In our technology-driven society, everyone is at risk. If you take donations online or store donor data digitally, this coverage is especially important.

Funds transfer fraud: This typically involves an outside party hacking into your financial accounts and illegally transferring funds. What’s important to note is that this crime isn’t covered by cyber liability insurance; set up a separate endorsement for this coverage, which is essential to protect your financial assets.

Volunteer coverage: Does your organization depend on volunteers? If so, potential volunteer injuries must be considered. Since they will not be covered under workers’ compensation or general liability, other coverage must be obtained. A separate volunteer accident policy is needed. And if volunteers use their vehicles for your services, non-owned auto coverage should also be in place.

International insurance: Do you partner with organizations overseas or send employees on international trips? Is much of your work conducted internationally? If so, an international general liability policy is critical.

Nonprofit tip: Review your policies each year with your agent to ensure you have the proper coverage for your dynamic organization.

Keep the Wolf from Your Door and Reduce Premiums

Which of the fabled three little pigs would get the best insurance premium?

Many factors go into determining your homeowner’s insurance rates, and building materials are one of them. What is your home made of: straw, sticks, or brick? And could the proverbial big bad wolf destroy it?

Rates are affected by your home’s flammability, and its ability to be destroyed by potential threats – natural and man-driven. If you are considering new construction, or just curious about how your home would rate in the fable above, note the following pros and cons of different building materials and their impact on your rates:

Steel beam construction: It’s less likely to burn, and may qualify for discounts. It’s also more likely to sustain damage in earthquakes.

Frame construction: Burns easily and completely, but is less likely to sustain earthquake damage. This costs more to insure than homes of the same value in the same area constructed of different materials.

Brick: Less likely to burn, brick costs less to insure than a similar frame home. Pure masonry materials usually receive a discount.

Stick-built: Insurance rates are lower for a home constructed on-site than for modular or mobile homes.

Modular/Mobile: Premiums reflect the value of the home as well as the risk. The values of a modular or mobile home is typically lower, but rates are higher: the two factors may balance out.

“Wolf-guards”: Regardless of construction type, many items can decrease premiums by reducing risk. Adding bolt locks, security systems, sprinkler systems, and smoke detectors helps “blow down” your rates.

Watch Out for DWD – Driving While Drowsy

Do you belong to the 37% of drivers who have fallen asleep behind the wheel? It’s a dangerous, and common, occurrence: More than 20% of fatal crashes involve a drowsy driver. Each year, an average of 886 fatal crashes, 37,000 injury crashes, and 45,000 property damage crashes are due to sleepy steering.

In short, drowsy driving puts property, your car, and your life at risk. Driving while fatigued increases your risk of accident by more than 50%. And even if no one else gets hurt (many drowsy-driving crashes involve a single driver running off the road), you risk damage to your car and increased insurance premiums. Why chance it?

The Sleep Foundation recommends the following tips to prevent drowsy driving.

Take a nap: Before going on a road trip, take a short nap. If you get drowsy while driving, pull over and take a nap; a twenty-minute snooze may save your life and others’ lives. Choose a safe location and keep in mind you’ll be groggy after waking, so don’t start driving again right away.

Take a buddy: Ask someone to share the driving on long trips. Switch every two hours. Take a nap when you aren’t behind the wheel.

Take your time: Safety first! Don’t rush to get there. If you’re delayed, pull off the road and call to explain. Better late than never.

Take the right beverage: Avoid alcohol before driving. Even small amounts will increase drowsiness. Instead, go for caffeine. But remember even strong coffee wears off after a few hours.

Take off at the right time: DWDs occur most often between midnight and 6:00 a.m. Try not to drive during these hours.

Take notice: Watch for signs that you are getting drowsy. Frequent blinking, heavy eyelids, daydreaming, missing exits/signs, yawning, lane-drifting, and feelings of restlessness are indications that you are committing a DWD. Pull over and get that rest.

Do Your Homework before Going Abroad for Medical Care

As the cost of US medical care continues to climb, many Americans are traveling abroad for surgery. The Centers for Disease Control estimates approximately 750,000 Americans travel abroad each year for medical care, including heart surgery, dentistry, and cosmetic surgery. While surgical costs can be lower abroad, there are risks. These considerations can help you decide if medical tourism is right for you.

  • Talk to your own health care provider about your plans. Your doctor may offer useful insights into the pros and cons and also can tell you if you should take any particular medical precautions, such as obtaining the appropriate vaccinations needed for the country you’re traveling to.
  • Ensure communication won’t be an issue; consider possible language barriers before you travel.
  • Thoroughly check out the credentials of the doctor abroad who will treat you and the surgical and aftercare facilities.
  • Take complete copies of your medical records with you and bring back your medical records from the overseas medical facility post-procedure.
  • Determine which US doctor will provide any needed aftercare; some physicians may refuse to treat you due to liability concerns.
  • Flying shortly after surgery can increase the risk of blood clots, so ask your home provider how long you should stay before returning home.
  • Buy a travel policy that includes medical tourism. Emergency evacuation/repatriation coverage can provide the broadest coverage and offer you great peace of mind.

Supplemental Insurance: Is It Really Worth It?

Each year, thousands of Americans transition from group health, no insurance, or a personal health insurance policy to Medicare; in 2015, more than fifty-five million Americans took advantage of Medicare coverage. And that’s good.

However, many people don’t realize that Medicare only covers part of their health care costs. The individual must cover the remainder, which includes copays, deductibles, and dental, hearing, and vision care.

Generally, when US citizens turn sixty-five, Medicare enrollment is automatic. However, the significant coverage gaps above can cause financial hardships if you don’t understand the choices Medicare offers. For example, “original” Medicare provides Part A (Hospital) insurance and Part B (Medical) insurance. However, Part A and Part B have different costs: Part A is automatic for most people; Part B is $104.90 per month in 2016. Both have copays and deductibles, which can be steep.

By sixty-five, most of us take at least one prescription medication. For prescription coverage under Medicare, you must have a Medic1are prescription drug plan. Therefore, you should consider Medicare’s Part D; be aware, however, that it will cost extra.

For help with copays and deductibles for lab tests, doctor visits, and hospitalizations, you’ll need to shop for supplemental coverage. Medicare pays private insurers a fixed amount each month to manage your health care. You may hear it called “Medigap,” “Part C,” or “Medicare Advantage,” and it requires an additional monthly premium payment.

Each supplemental plan covers different doctors, hospitals, and lab facilities, so it’s important to work with an experienced health insurance agent to choose a plan that will cover the medical providers you want to work with.

If this all sounds confusing, it is. While you can navigate the Medicare website, gather information about the various plans, and even choose a policy online, you run the risk of making a costly mistake. Talk to an agent before you make that important transition to Medicare.

Protect Against the Unforeseen with a Life Policy

In August 2016, more than 40,000 homes were damaged by devastating floods in Louisiana, and a majority of the homeowners didn’t have flood insurance.

According to FEMA, which oversees the National Flood Insurance program, only 42% of homes in Louisiana’s high-risk areas are covered for floods. Only 12.5% of homes outside designated flood zones have coverage, and many of the homes affected were outside of designated flood zones.

Repairing or replacing these homes will be challenging, which underscores the importance of having the right kind and amount of insurance. And that wisdom applies to all insurance, not just flood insurance. Insurance is designed to protect you against unforeseeable events, so whether it’s a flood, an auto accident, or the death of a loved one, you’ll need it.

Life insurance

Take life insurance. If your loved ones will suffer financially when you die, chances are you need life insurance to provide cash to your family in the event of your death. And there’s no federal income tax on life insurance benefits.

This cash, referred to as a death benefit, replaces your income and helps your family meet important financial needs. These range from managing daily living expenses to paying funeral costs. And while your children are grown and have moved out of the house, you may still need life insurance. What about your mortgage – is it paid off? Even so, your spouse will still have to manage daily living expenses. Without life insurance funds, does your financial plan allow your spouse to maintain the lifestyle you both worked so hard to achieve?

Then there’s the issue of your estate: depending on its size, your heirs could be hit with an estate tax bill of up to 45% after you die. The proceeds of a life insurance policy would allow your heirs to pay these taxes immediately.

Concerned? Ask your advisor about your options now.