Trim Carpenter

5 types of Insurance Coverage every Trim Carpenter should strongly consider

A Trim Carpenter typically performs only interior work such as cabinet installation and interior trim for construction projects. There are many other types of carpenters who perform exterior work only or both. Because of the differences in the nature of the work between these types of carpenters, the risks they face are also different. Interior carpentry normally consists of either rough or finish work. Rough work involves framing windows and doors, laying floor joists and subfloors, stairways and more. This type of carpentry can also include: hanging doors, installing baseboards, installing the molding around doors and windows, and making or installing cabinets and shelving. There are many other types of custom builds the carpenter might partake in. All of this type of work can lead to bodily injury claims for the carpenter or their employees. It can also lead to risk if the windows or doors are damaged during installation. With these different risks a trim carpenter faces, comes a need for many different types of insurance coverage.  Here are five types of insurance coverage every Trim Carpenter should strongly consider purchasing.

Trim Carpenter

Recommended Insurance Programs for Carpenters

  • General Liability Insurance
  • Commercial Property Coverage
  • Inland Marine Insurance
  • Commercial Auto
  • Workers Compensation Insurance

Other coverages to consider for the various types of Carpentry:
Business Personal Property, Employee Dishonesty, Contractors’ Equipment and Tool Floater (Inland Marine), Umbrella Liability Coverage, Business Income with Extra Expense, Builders Risk, Goods in Transit and Installation Floater.

Tools for a Carpenter

General Liability Insurance for a Carpenter

General liability exposures at a trim carpenters shop are normally somewhat limited. These limitations are due to the lack of public access to the carpenters property. There should be policies in place because risks like fires from woodworking and/or lumber storage can affect neighboring businesses or homes. Talking about all the different elements of your business with your experienced insurance agent can help you prevent severe or frequent claims.

Carpenters Commercial Property Coverage

Carpenters face commercial property exposures at their location, but those exposures are limited to the office area and storage of materials, equipment and vehicles. If the risks will be different depending upon if the business owns the building or rents.

Inland Marine Insurance for a Carpenter

Inland marine insurance coverage is designed to protect businesses that have specialized equipment or equipment that is frequently in transit. This equipment includes owned or rented tools.  The tools may include tables saws, scaffolding, building materials and materials being transported to and from the job-site. These tools and equipment are heavy but less likely to be damaged during transport. Transporting woodwork done at the carpenter’s shop increases the exposure because these items are more susceptible to damage from shifting, improper loading or inadequate tie-down. Inland marine insurance coverage is needed for nearly all carpentry businesses.

Carpenters Commercial Auto Coverage

Auto liability exposures are limited, for the most part. This limited exposure is limited unless lumber and pre-made items are frequently transported by the carpenter. The hazards of transport include failure to secure the load properly and equipment failure. Paying attention to your employees age, training, experience and driving records can limit these risks. Also, the condition and maintenance of the vehicles are important considerations.  Those maintenance records should be documented in order for your insurance agent to use this record to negotiate better rates on insurance premium.  Companies who allow employees to drive their personal vehicles for business purposes should purchase a separate hired and non-owned auto policy.

Workers Compensation Insurance for a Carpenter

Workers comp liability varies based on the size and nature of the job the carpenter is working on. Work with hand tools and sharp objects can result in cuts, piercings and accidental amputation. Lifting injuries such as hernias, strains, sprains and back injuries may occur. Minor injuries may be frequent even when the severity exposure is controlled. When work is done on ladders and scaffolds, there is a potential for severe injury or death from falling, being struck by falling objects or adverse weather conditions. Addressing all of these risks with proper safety programs and equipment can help you reduce the frequency and severity of the claims your business has.  FOr this reason, it is extremely important to train all employees in the proper use of basic safety equipment.

Carpentry Shop

Common Carpenter Liability Classification Codes

SIC Business Insurance Codes:

  • 1751: Carpentry Work
  • 1521: Residential Construction

NAICS Liability Classifications:

  • 238350: Finish Carpentry Contractors
  • 236118: Residential Remodelers
  • 238330: Flooring Contractors
  • 238390: Other Building Finishing Contractors

Business ISO General Liability:

  • 91340: Carpentry—Construction of Residential Homes
  • 91341: Interior Carpenter
  • 91342: Carpentry—Not Classified Elsewhere
  • 91343: Carpentry—Shop Only

Common Workers Compensation Class Codes:

  • 5437: Carpentry—Cabinets and Interior Trim
  • 5403: Carpenters—Not Classified Elsewhere
  • 2802: Carpentry—Shop Only
  • 5432: California Class—Carpentry
  • 5645: Carpentry—Residential Construction

Additional Insured or Waiver of Subrogation

My Customer Service Representative (CSR) and I see a ton of Certificate of Insurance requests come to us. Many of our clients do not understand what a Certificate Holder is or what being an additional insured means.  When requesting a Certificate of insurance for Workers Compensation many of my clients do not understand why an Additional Insured cannot be named on a Work Comp Policy.  Well I am going to shed some light on some common terms that will help you through the process of obtaining a certificate of insurance from your insurance agency.

Certificate of Insurance

Certificate of Insurance: A document issued by an insurance company or broker that is used to verify insurance coverage under specific conditions grated to listed individuals. More specifically the document lists the effective date of the policy, the type of insurance coverage purchased, and the limits of liability or dollar amount of coverage.

Additional Insured: A type of status associated with General Liability Policies that Provides coverage to other individuals or a group that were not initially named. After endorsement, the additional insured will then be protected under the named insurer’s policy and can file a claim in the event that they are sued.Additional Insured is available on General Liability, Auto Liability and Umbrella Liability.

Certificate Holder: A certificate holder is an individual or entity that is named on the certificate of insurance in order to be notified in the event that any coverage on the certificate is cancelled prior to the renewal date. No coverage protection under the contractor’s policies is provided to a Certificate Holder.

Waiver of Subrogation: A waiver of subrogation means that the insurance carrier agrees to relinquish any right to recover damages if it is determined in the course of investigating the claim that the client or one of the client’s employees was responsible for the loss. An insurance carrier may reserve the “right of subrogation” in the event of a loss. This means that the company may choose to take action to recover the amount of a claim paid to a covered insured if the loss was caused by a third party.

Waiver of Subrogation is available on General Liability, Auto Liability, Umbrella Liability and Workers Compensation.

A waiver of subrogation provision prevents the insurance company (who steps into the shoes of the insured after it pays a loss) from suing the other party to the contract – which likely caused the loss.  Moreover, waiver of subrogation provisions found in contracts are generally upheld by Courts.

When a contractor works on another person’s property, there are risks involved. Contractors can sometimes damage personal property or may even be injured while performing the work. Companies and individuals that hire contractors want to be certain that they will not be held liable for injuries, damages or substandard work. For this reason, they will frequently request to see a certificate of insurance.

Client’s call and request an additional insured to be added to a work comp policy that however cannot be done. As stated above an additional insured is naming someone else on your policy and a Work Comp policy is written to cover the injured employees not another company.  The alternative to that would be requesting a Waiver of Subrogation.  If you are a sub contractor and you are working with a larger company that is requesting a Waiver of Subrogation make sure you understand what you are being asked to waive.

If your company hires subcontractors, it is extremely important that you get a certificate of insurance from each one you work with. Even if you trust your subcontractors – for example, if you have worked with these contractors in the past and knew them to have insurance at the time – you should submit a certificate of insurance request each time you hire them onto a new job. Doing so can prevent a scenario where you inadvertently take on the risks associated with the work your subcontractors perform.

 

Let’s just Sub that out……

Risk mitigation standards to keep in mind when using Subcontractors:

The topic of subcontracting comes up in several scenarios when it comes to small businesses, especially contracting and construction. This topic can bring up many questions from a legal, tax, and insurance standpoint. I’ll leave the legal and tax part to your Attorney and CPA. Here we will discuss, from an insurance standpoint, how to protect yourself and your business.

Get info about CPA and Accountants Liability Insurance at www.myinsurancequestion.com

Subcontracting in the perspective of 1099’s vs W-2 employees is generally  a very grey area with most contractors. It does not have to be. Here is why. Working with your independent insurance agent should allow you to determine if your employees truly are 1099 or traditional W2 employees. Many business owners think they have contractors, but to the letter of the law the workers are employees and require your business to cover them under a workers’ compensation policy. When it comes to General Contractors and those who have true subcontractors working for them, you still need to make sure you are protecting yourself.

Most business owners have chosen to utilize subcontractors for a combination of the following reasons: a specialized trade your business does not primarily do, the contractor is brought in for a specific job for a specific purpose, & this person or company you have “hired” is not an employee so you are not providing any typical employer benefits and it is your intent for them to cover their own business liabilities on their own in hopes of taking this off of your company. At least partially take this risk off of your company. When it comes to managing your risk, many business owners wonder, am I doing everything I can to mitigate these risks? There are many benefits of subcontracting work out, but if not done properly you are opening yourself and your business to a significant amount of liability. This liability could be costly, even detrimental to your business.

If you hire subcontractors, find out if you need separate insurance policies at My Insurance Question.com

Here are a few basics requirements that you will want to make sure you verify with all of your subcontractors before they step onto your jobsite:

Confirm proof of Basic Insurance Coverages:

                General Liability: (Common Limit Amount $1Million Per Occurrence/$2Million General Aggregate) This coverage varies from company to company, but the basic coverage is intended to protect from damages to 3rd parties as a result of the business operations for the company being insured. So if your subcontractors work operations cause physical damage or bodily injury to someone (excluding employees). This policy is a basic protection to cover those types of damages. For most artisan subcontractors we typically recommend a minimum limit of $1 Million per occurrence with a $2 Million General Aggregate limit.
                 

                 Workers Compensation: This coverage is intended to cover medical expenses and a portion of lost wages for injuries incurred on the job for employees working for the business. This in particular is commonly overlooked since many subs are owner only companies, however if that owner only company despite not being required by law to carry workers comp gets injured on your jobsite you could see some liability for that. Making sure they provide a certificate of insurance to protect yourself. (Please note: current insurance certificates also point out if any officer the company are excluded from coverage; if you have a sub that does not have employees and they are excluding themselves then their coverage might not be sufficient to protect you)

                Commercial Auto: (Common Limit amount ($1 Million) With some projects there are many vehicles used in the course of the operation. Whether going from one jobsite to another but also going to pick up supplies. Making sure your subs have Commercial auto liability coverage. At least making sure Hired/Non-Owned Auto endorsements are added to their General liability/BOP policy can be a minimum coverage to consider if they truly don’t have any vehicles.

                Umbrella/Excess Liability Policy (amount needed will vary): Umbrella limits to increase the liability limits can be important especially depending on the size of the project and how many contractors your sub works for, a standard $1M/$2M General Liability Limit might not be sufficient. The reason for this is a $1 Million Occurrence limit on General Liability means the most one claim would pay is $1 million. If a sub has 2 claims of that amount, then they do not have any more coverage as their limits have all been used up on a $2 million General aggregate limit. For a small contractor having a $1 Million-$2 Million excess liability limit can be a good buffer to extend that, however for larger contractors this can easily go up to $5 Million or $10 Million and sometimes even higher.

If a subcontractor is doing major projects for you and several other general contractors but doesn’t have higher limits, one or two major claims could potentially wipe out their insurance limits leaving no coverage for the remainder of a policy period. If you have several projects that are total over the subs limits or if you have a multi-million-dollar project, the liability limit of some subs might not be to the level they should be at in the event of a catastrophic claim especially.

                Waiver of Subrogation & Additional Insured: Additional Insured wording for the General liability and Commercial auto coverage and Waiver of subrogation on all three lines of insurance are two good ways to keep your company further protected as the General Contractor. An additional insured endorsement adds certain protections to the Additional insured for jobs the sub works on for you and the waiver of subrogation protects you from the subs insurance company from going after your company for damages. Keep in mind, these are sometimes put on a blanket or individual basis. The blankets in particular typically require a Written Contract between you and the subcontractor. Which leads me to….

                Have a Written Contract: This day in age there is no good reason not to have a written contract of some sort for business conducted, especially in the construction field. Too many things can go wrong so it’s best to have a written contract. Especially on that has a Hold Harmless Agreement, insurance requirements with the above minimums and including the Waiver of Subrogation & Additional Insured requirements for applicable policies. There are many samples of contracts you can find online, as always, check with your attorney to make sure it has everything you need as well.

                Screen Certificates of Insurance: In a time where insurance policies can be very costly, some sub-contractors do try to skirt the system. Fraudulent certificates of insurance whether they are for policies that never existed or for policies that have expired and the sub altered the dates these do unfortunately happen. The best way to keep from becoming a victim of this is to have certificates of insurance sent from the subcontractors Insurance Agent and make sure you are listed as a Certificate Holder. This way their agent will be able to let you know if a policy is cancelled before the expiration date.

These are just a few basics policies you will want to make sure you require from your subcontractors. Consulting with your Insurance Agent and your attorney can be best practices to make sure you doing everything you can to protect yourself. and your business.

 

20 terms you need to know when purchasing or renewing commercial insurance

For many business owners, purchasing insurance is a foreign concept. Like many industries there are terms only the insiders know and they frequently use when discussing the policies. Here is a list of 20 terms that will give you a leg up the next time you are purchasing or renewing your commercial insurance policy.

 20 commercial insurance terms to be aware of the next time you look to buy small business insurance.

Insurer –  a person or company that underwrites an insurance risk; the party in an insurance contract undertaking the risk to pay compensation.

Insured –  a person or organization covered by an insurance policy.

Peril –   the possibility that you will be hurt or killed or that something unpleasant or bad will happen.  exposure to the risk of being injured, destroyed, or lost.

Premium –   An amount to be paid for an insurance policy. It is an amount paid periodically to the insurer by the insured for covering their risk.

Deductible –  A deductible is the amount you have to pay out-of-pocket before the insurance company will cover your remaining costs. 

1st person liability –  First person liability is for damage that is done to you or your business. A good example of this would be a commercial property insurance policy. This policy covers the damages to you and your property. It does not cover the damage to another persons’ property or if they are hurt on your property.

3rd person liability –  Third person liability is liability that you or your business has to other third parties. Third parties can include customers, vendors, other businesses or anyone who may be harm by the actions of you or your business.

 Claims-made policy –  A policy written on a claims-made basis means that if the insurance is in place when the claim is made, but not when the occurrence took place than the insurer responsible for the claim is the insurer when the claim is made. This is common for professionals like a lawyer or an engineer. In these professions a claim is frequently filed months if not years after the occurrence takes place. At that time the insured may have coverage with a different company and there may be some discrepancy between who is responsible for the claim.

Occurrence based Policy –  A policy written on an occurrence basis means that the insurer responsible for the claim is the insurer who was in place when the occurrence took place. If an engineer works on a house and there is a problem with the house years later than the insurer responsible for the occurrence is the insurer that was in place when the occurrence took place.

 Endorsement –  an endorsement is a document attached to an insurance policy that amends the policy in some way. An endorsement may add, remove or alter the scope of coverage under the policy.

Negligence –  Negligence in relation to insurance means a person or business did not demonstrate appropriate amounts of care or responsibility for a particular situation. The failure to take appropriate precautions can cause you to be considered liable for the damage.  This can also be referred to as the failure to use a degree of care considered reasonable under a given set of circumstances. Liability policies are designed to cover claims of negligence.

Named Insured –  Any person, business or organization who is specifically named as an insured on an insurance policy. This is different from entities who although unnamed may fall within the policy definition of an insured.

Ordinance or Law Coverage –  Coverage for loss caused by the enforcement of an ordinance or law regulating construction and repair of a damaged property. Older structures that are damaged may need to be upgraded in regards to electrical, plumbing, venting, etc. A typical commercial property insurance policy does not pay for these additional cost. This policy is an endorsement on top of your commercial insurance policy and will cover the additional costs needed to bring the new building up to date.

A 'Hammer Clause' is a provision within an insurance policy that gives the insurer the right to settle for an undisclosed amount and if the insured does not agree to the settlement than they take on some or all of the risk. Hammer Clause –  A ‘Hammer Clause‘ is a provision within an insurance policy that gives the insurer the right to settle for an undisclosed amount and if the insured does not agree to the settlement than they take on some or all of the risk. In some cases, the insured takes on all of the risk, but in many cases it is 70/30 or 50/50.

The Assigned Risk Provider (Also known as the pool or the state fund) –  The assigned risk provider applies to workers’ compensation coverage. It is the provider of last resort within each state for businesses who cannot obtain coverage on the open market. The business may not be able to obtain coverage for a number of reasons. Typically, it is because of the small size of the company or because of their loss history. The Assigned Risk Provider offers coverage at a higher rate and typically once you are in the pool you must stay in the pool for 2-3 years.

Business Owners’ Package (BOP) –  A business owner’s policy, commonly referred to as a BOP, combines several lines of coverage built into one policy. They are often better suited for small business owners because they offer targeted coverage options designed for specific types of businesses within certain industries. They are usually less expensive then purchasing coverage separately because the business is purchasing multiple policies for liability, property, commercial auto, etc. 

Find out if you as an Artisan Contractors need workers compensation insurance coverage at myinsurancequestion.comArtisan Contractor –   This term refers to businesses in several different industries. It includes many occupations that involve skilled work with tools at the customer’s premises. Carpenters, plumbers, electricians, roofers and tree surgeons are some professions that would be included in this group of businesses. Also included are diverse other skilled service providers, such as interior decorators, piano tuners and exterminators.

Loss History –  Loss history is a documented history of damages or losses connected with a given asset. It is a way for the insurance carrier to determine the amount of claims your business has against an insurance policy.  They use it to determine how much premium to charge or if they are willing to take on the risk altogether. 

Inland Marine Insurance – Inland Marine Insurance is property insurance for property that is likely to be in transit over land.  Many inland marine coverage forms provide coverage without regard to the location of the covered property; these are sometimes called “floater” policies. As a group, inland marine coverage forms are generally broader than property coverage forms.

Find out if your business truly needs commercial umbrella coverage at myinsurancequestion.comUmbrella Coverage –  The umbrella policy serves three purposes: it provides excess limits when the limits of underlying liability policies are exhausted by the payment of claims; it drops down and picks up where the underlying policy leaves off when the aggregate limit of the underlying policy in question is exhausted by the payment of claims; and it provides protection against some claims not covered by the underlying policies, subject to the assumption by the named insured of a self-insured retention (SIR).

Artisan Contractors

Why would an artisan contractor need data breach coverage?

Data breach (or cyber liability) coverage has been one of the hottest topics in the insurance industry over the past few years. Insurance companies and agents alike unanimously agree that this line of insurance coverage is becoming critical for small businesses to protect themselves, but the odd disconnect is that many businesses don’t see the value.

First, let’s start by explaining what data breach coverage is designed to protect. This policy is designed to cover data breach recovery costs such as notifying any person/business potentially affected, good-faith advertising, and repairing security of the system. The coverage is important because a business is held responsible for protecting the personal information it collects from someone else. Most states have already passed (or are passing) regulations for steps a business must take for their clients when a data breach occurs. These regulations typically require formal notification that a breach has occurred to all potentially impacted clients, and typically the business must offer credit monitoring services for those clients for 1 year. Those steps alone can amount to a huge expense.

Most artisan contractors feel like this risk doesn’t relate to them at all, and others don’t realize that they aren’t properly covered. A recent study found that 39 percent of business owners think that data breach coverage is a part of their general liability policy. This thinking is wrong. Occasionally, a business owners package (or BOP) policy will include some minimal data breach coverage, but the limits are so low that the coverage would likely only cover a portion of any claim that existed. Many artisan contractors buy GL-only policies instead of a BOP anyway, because they feel like the extra coverage’s aren’t important for their business … and cyber liability is one line of insurance that is still considered a “luxury” expense.

In fact, one of my clients who is an artisan contractor and does HVAC work expressed himself pretty clearly: “Don’t try to sell me something that has no impact on my business. I don’t keep much information on my clients, and I’m so small that nobody would want to take the time to hack my company.”

That’s when I brought up the Target data breach, which he knew about because he was one of the victims and had to get new credit cards issued because of the hack. What this artisan contractor didn’t realize was that the hackers used a third-party vendor, HVAC company Fazio Mechanical Services, to gain access to the Target system.

The Home Depot data breach also began via a hack of a third-party vendor. In fact, using a third-party vendor is becoming the most common method for as an access point for a larger hack. As an artisan contractor, this is becoming the new risk and larger companies are starting to take notice.

Many larger organizations are now requiring a sub contractor to carry a separate cyber liability policy, along with the more typical insurance requirements (workers compensation, general liability, umbrella, etc.).

Over the next few years, I think getting a data breach policy is not only a necessary way to protect your business, but it is also a great way to separate yourself from the competition.