Contractors Get Good Insurance & Use It!

More and more in my everyday practice I encounter issues with contractor general liability insurance (GL). Whether I am defending a contractor or going after one, there tend to be issues with GL carriers. Here are some tips on coverage and others for contractors who have issues. First and foremost, contractors need to get a solid policy, pay the policy premium form year to year and do not let it lapse. This is typically where contractors get it right. The bad thing is, that most think this is all they need to do in order to be "covered" in the event of a loss or occurrence. Unfortunately, I represent contractors all the time who never take it past this step. Next, the most important and most often overlooked aspect is notifying the insurer when trouble starts. Every policy has notice requirements within it that must be strictly followed. If you are an electrician and a fire happens on the job, the first person you should call is the insurer and/or your insurance agent and put them on notice. This way you put the ball in the insurance company's court, and legally they must do certain things in response, such as decline coverage and/or adjust the claim. If you ever have a lawsuit filed against you put the insurer on notice immediately! This is a must, and I've had insurers get out of cases the insurance company was not noticed timely. A lot of contractors do not want to make claims to the insurance because they feel they policy premium will rise. While this may be an end result, the potential downside of litigation is much more harsh than an increased policy premium. Do not be afraid to make the claim because the insurer will not hesitate to deny your claim and/or fight you regarding coverage. One huge benefit of notifying insurers when problems occur, is the insurers duty to defend. Even if there is the slightest possibility there may be coverage under the policy, the insurance company has s duty to defend a contractor in litigation. This aspect alone could save you thousands of dollars in legal fees. Insurers will defend the insurable interest, so it may be wise as a contractor to get separate counsel to assure that all of your interests will be covered. The counsel you retain personally can work in conjunction with the one provided by the insurer, whereby you get double the legal manpower for half the price. Finally, most contractors know and all should know that GL policies do not cover bad work or defective workmanship. This would be covered in a totally different policy called builders risk. Courts here in Louisiana have decided on a number of occasions that GL policies do cover damage that is a result of bad workmanship. ie... a GL policy does not cover a poorly installed leaky roof, but it will cover all the water damage the house suffers as a result. The moral of this story for contractors to not only get GL coverage, but to use it. There is no point in paying thousands of dollars each year for a premium, if you are not going to use the benefits of it. If you think the insurance company is going return the favor if an issue does arise, you will be sadly mistaken. Wolfe Law Group fights for the rights of owners/contractors who are having issues with insurance companies and other players in the construction industry.
About the Author: Seth Smiley
Seth is an attorney licensed to practice in Louisiana and California. He is the owner and lead attorney at Smiley Law Firm. To speak with Seth fill out the form on this page. Follow Seth on LinkedIn, Google+, or Twitter.

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