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Can your liability insurance company also bond your construction company?
Haroldt
Not only is it possible for the company writing the commercial general liability insurance of a contractor write a surety bond for the same company, it is often preferred. The insurer writing the commercial general liability (CGL or GL) is uniquely qualified to write the bond quickly and in a more cost effective manor. The GL insurer already has important underwriting information on the contractor on file, which can expedite underwriting. The insurer already knows the size and expertise of the company, payroll, payment history on insurance premiums, claims history, and usually a loss control survey. They may or may not already have a business credit report on file. Therefore, the carrier which writes the GL only has to gather underwriting information in relation to the specific contract to be covered by the bid or performance bond. This reduces the cost and time to underwrite the bond, and this savings can be passed on to the applicant. Also, some carriers underwrite insurance from, the "account perspective." The underwriter takes into consideration the profitability of the entire account when writing a new line of coverage, not just the policy presently being underwritten. This means that if the existing lines of an account are profitable, and the bond is seen as marginal or questionable, it may be written as an accommodation by the underwriter in consideration of the other, more profitable lines. However, not all insurance carriers writing general liability for contractors write surety bonds, or they may not be the most cost effectively priced. However, the carrier writing the GL is a great place to start for a bond, and due to time constraints in certain situations, may be chosen even if they are not the most cost effectively priced. Remember, there is no difference between carriers on the surety bond form, as it is prescribed by the indemnitee (party which could potentially receive a payment from the bond). The only difference between surety companies is the premium charged for the bond, the collateral required (at the very least a corporate indemnification) and the financial rating of the surety company. Mark Walters, ARM AAI West Insurance Group mwalters@westagy.com
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∙ 15y ago
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Where can I find construction liability insurance online?
Construction liability insurance costs depend on exactly what in your construction business you want to be protected against. You can choose policies that cover every aspect of building and which cost more depending on the actual cost of your building project. You can also opt for more restricted policies which provide liability insurance on certain portions of your building projects. Most major insurance carriers offer liability insurance, and you may first want to start by calling the carriers that are listed in the yellow pages of your phone book. If they do not carry the type of liability insurance you need, they can often refer you to a company that has just what you need.
What kind of insurance policy do I need to start a construction business?
Most states require some form of contractors liability insurance for contractors to operate a business. It is also in the contractors best interest to have liability insurance to protect against any type of problems which may arise during construction. Liability insurance is also a marketing tool which many customers like to see when choosing a contractor.
Does liability insurance cover construction mistakes?
Liability insurance covers third party lawsuits resulting from a contractors operations. This includes parties injured by faulty construction and also property damage resulting from faulty construction. Liability insurance DOES NOT cover the contractors property that is "their work" which needs to be covered by builders risk insurance. Construction insurance policies are complex so make sure you work with a construction insurance broker to get quotes and understand what you are buying. Policies can be written to exclude types of work, certain projects, certain types of claims, and prior work performed.
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