By Julie Yoder, Commercial Lines Manager
Congratulations! You’ve been awarded the contract!
The competition was tough, but you just received word that you got the job! Wonderful news for a construction contractor in an economy dealing with a Global Pandemic. Material lists, possible additional labor, timelines, but did we review the insurance requirements for the job prior to turning in the bid?
What are Insurance Requirements?
Insurance Requirements are those sections of a request for purchase (RFP), contract or bid that explain what insurance coverages and limits are required. They can include the following:
- additional insured language
- waivers of subrogation
- primary language
- third party notices of cancellation,
- aggregate limits per project/location
- coverages not previously included in your business insurance program.
It could mean that the existing $3,000,000 umbrella will require an increase.
What if my Insurance Requirements are difficult to understand?
Your partnered insurance agent can assist you with interpreting these requirements. They can also help review financial impact of any increases or broadenings of coverage to your existing program. Your agent may require the job amount, the estimated payroll for the specific job as well as the timetable for the job. In some circumstances, they may be able to obtain these increases/extensions for a specific job. In others, the insurance carrier may require the changes to the entire program. Your agent will provide you with the various options so you may make an informed decision together.
How will I provide proof of these coverages?
A Certificate of Insurance is a general summary of insurance policies. It includes current coverages, limits, insurer and policy terms. Your insurance agent will issue the Certificate and send copies to both you and the Certificate Holder
Can I delete the coverages once the job is completed?
If there is a provision in the contract that requires coverages be in place for a certain number of years after completion, then contractually you are required to maintain the limits for that period. If the contract does not have any provisions, we recommend that discuss these with your agent at renewal and make any needed changes.
Will I be required to obtain a Certificate of Insurance from a subcontractor that I use?
Most contracts require that lower tiered contractors adhere to requirements in the prime contract. Provide the subcontractor with a copy of those requirements and obtain a certificate of insurance in order to verify coverage.
Is there someone who can assist me with verifying the coverages on the Certificate that I receive from my subcontractor?
Yes, your agency partner representative can assist you with interpreting the coverages to verify compliance.
What is the advantage of reviewing these requirements prior to getting the job?
By discussing the costs involved with any necessary increases early, you can incorporate any additional premiums into your bid amount. If you believe some requirements are much higher than your estimated job amount, you may be able to provide that as an alternate. As an illustration, if your bid amount is closer to $10,000, but the Insurance Requirements are for a $10,000,000 umbrella, you may be able to provide an alternate bid providing the additional cost to honor the $10,000,000 umbrella limit.