What Is REALLY Covered In A Liability Insurance Poilicy? - Business - Contractor Talk

What Is REALLY Covered In A Liability Insurance Poilicy?

 
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Old 11-30-2014, 04:55 PM   #1
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What Is REALLY Covered In A Liability Insurance Poilicy?


I have a liability policy that Ive had for at least 8 years now. I just renew it every year and never made a claim off it.

Its up for renewal and I started to ask a few questions before I renewed it , in a 5 minute conversation over the phone I found out that neither myself or the insurance broker I was talking to actually knew what was covered in this policy.

She said a lot of maybe, and probably covered and at one point said "I guess you'd have to see if things were covered 'after' they happened"

At that point I nearly chocked.... that was Friday and her supervisor was going to call me to discuss this.

Anyone on here have any experience of how to find out just what is covered and how to know with a degree of certainty that what you are doing in your day to day tasks is covered?
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Old 11-30-2014, 05:41 PM   #2
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


http://www.hiscox.com/small-business...e/gl-coverage/

This is an overview.

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Old 11-30-2014, 09:26 PM   #3
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


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Originally Posted by WBailey1041 View Post
Thanks that was interesting to read.
When I talked to the broker Friday I asked things like

1. If i put in some taps and the phone rang I got distracted and I didn't connect the water lines properly and it caused a flood that night?

she answered, oh...err no we don't have you down for doing anything plumbing related.

2. If I was on a roof and I accidentally dropped a brick through the clients skylight and the glass fell on the clients head?

Answer, erm... probably not.

and it went on like that, no really a definitive answer at all. Also I asked her if I did make a claim does the insurance company pay out if there is damage or only of the client sues me for the damage..
She didn't have the answer for that either.

So I have some digging around to do for answers. I'm a sole proprietor to, so here in Canada whoever sues you can come after your personal property. I'll have to get that one sorted out.
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Old 11-30-2014, 09:54 PM   #4
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


I think the way it works in the US is they sue the insurance company until the limits of liability are reached, then come after you if you have any worthy assets.

An incorporation may help.
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Old 11-30-2014, 10:48 PM   #5
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


Mine doesn't cover much of anything relevant to what I do. I only have it for marketing reasons and the occasional business to business customer that has to have any subs working on their property covered under their own policy. Mostly apartment complexes and property managers are the ones asking for a copy of the policy.

I had a "tool" rider on my policy and I when I went to collect after my tools were stolen. I had to jump thru so many hoops and got my policy cancelled in the end I would never pay extra for that again.
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Old 12-01-2014, 08:06 AM   #6
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


Unfortunately, it sounds like the broker you were talking with isn't very experienced so doesn't have the confidence to answer your questions with certainty. She likely was coached to not give any definitive "yes, you are covered" answers. The Liability section of an insurance policy is anywhere from 25 to 40 pages long. It reads along the lines of: You are insured if you install taps incorrectly and there is ensuing water damage; but you are not insured if you are supposed to be licensed to do that type of plumbing work and don't have the required license; but you are covered if a sub-contractor completed the work for you and you weren't aware that he wasn't properly licensed; however you are not covered if he was working for you illegally. It is very difficult to condense a 40 page document into a short answer of "yes you are covered. period."

What is the description of the work you do under your policy? Put the words "usual to the business of" in front of that description. So, if your policy reads "renovation contractor"; then any work that is "usual to the business of a renovation contractor" is insured. Installing taps would be an insured operation; going to the post office and visiting potential clients to give quotes would be an insured operation. Digging a hole for a new swimming pool would not be insured. In that case, your policy should read "renovation contractor and swimming pool contractor" or "renovation contractor and excavation contractor".

You do not have to be sued in a court of law for your liability policy to respond. The third party simply has to make a claim that they either suffered a bodily injury or property damage and that you were responsible. If you receive a phone call from a former customer telling you that their basement flooded, that is enough for the insurance company to open up a claim file and start investigating. Not all claims are horror shows with insurance companies denying coverage. We usually hear about those situations; no one ever mentions all the claims that get quickly settled because it was obvious that the Insured was negligent so the insurance company pays the damages.

Canada and the USA are rather similar in the way the insurance industry works, other than the fine print. The third party (customer) does not sue the insurance company. There are actually two different relationships at play. One is the relationship between the customer and yourself. The customer makes a claim against you (which may include a lawsuit or may not) if they suffered a loss and they feel you are responsible for their loss. The insurance company didn't do anything to the customer, so there are no legal grounds for claiming or suing against them. The second relationship is between you and your insurance company. Your liability insurance policy states that in the event something happens that is a covered peril, the insurance company will step in and pay for any costs associated with that incident. In turn, you transfer your rights to make decisions re that settlement over to the insurance company. They kind of step in like a pinch hitter or substitute and act as your representative in dealing with the customer to arrive at a settlement.

There's always more to add, but I think this post is long enough.
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Old 12-01-2014, 10:15 AM   #7
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


Good to see you Astrix!

She flat knows her insurance stuff
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Old 12-01-2014, 02:29 PM   #8
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


I suggest everyone double check what their insurance covers.

While I thought my dump trailer was covered under my equipment policy, it wasn't.
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Old 12-01-2014, 02:31 PM   #9
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


Quote:
Originally Posted by BamBamm5144 View Post
I suggest everyone double check what their insurance covers.

While I thought my dump trailer was covered under my equipment policy, it wasn't.
Dude, that sucks man. Im sorry to hear that.
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Old 12-01-2014, 02:35 PM   #10
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


Quote:
Originally Posted by BamBamm5144 View Post
I suggest everyone double check what their insurance covers.

While I thought my dump trailer was covered under my equipment policy, it wasn't.

So now we know. Drunk drivers after hours are not covered. Got it.
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Old 12-01-2014, 05:04 PM   #11
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


Sounds to me like you need a different insurance agent if she couldn't/wouldn't answer some pretty basic questions about your policy. 'Ummm......Maybe' is NOT the answer I want to hear from somebody who is supposedly there to cover my ass if something goes wrong.
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Old 12-01-2014, 05:33 PM   #12
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


good luck man...it is more difficult than it should be thats for sure!

I thought i knew...few months back had some tools stolen (not much about 3500 worth)

Had a tool rider that i thought covered my tools. well, they sent a check about 900 short of the replacement cost. called and asked about that and they said my tool coverage was not actually replacement value...

after i flipped my chit about it they were more than happy to sign me up for replacement cost rider if i wanted to...
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Old 12-01-2014, 09:14 PM   #13
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


Quote:
Originally Posted by BamBamm5144 View Post
I suggest everyone double check what their insurance covers.

While I thought my dump trailer was covered under my equipment policy, it wasn't.
If you have a vehicle registration from the Ministry of Transportation; in other words, your trailer is plated; then it has to be insured under an Automobile Insurance Policy. If the trailer doesn't need to be plated for use on a public road, then it gets insured under an Equipment Floater. Examples would be a jobsite office trailer; or a utility trailer whose MoT registration was no longer renewed because it is now up on blocks and used as a storage shed.

The key deciding factor between Auto Policy or Equipment Policy is whether you have an MoT registration (green ownership) and license plate. Don't get this requirement of MoT licensing confused with whether it actually goes on a public road or not.

Take, for example, mobile cranes. You can have a Sterling Truck which has a hoist or crane attached to the back. This Sterling will likely have a green ownership and license plate, and have to be registered with the MoT. This type of mobile crane gets insured under an Auto Policy. However, another type of crane is a Manitowoc. Like a backhoe or excavator, it doesn't get registered with the MoT; but occasionally you might see one on a public road, getting driven from one jobsite to another jobsite. This type of unplated crane is insured under a Contractor's Equipment Policy with liability coverage provide by a Commercial General Liability Policy.
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Old 12-01-2014, 09:37 PM   #14
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


Quote:
Originally Posted by Mark122 View Post
good luck man...it is more difficult than it should be thats for sure!

I thought i knew...few months back had some tools stolen (not much about 3500 worth)

Had a tool rider that i thought covered my tools. well, they sent a check about 900 short of the replacement cost. called and asked about that and they said my tool coverage was not actually replacement value...

after i flipped my chit about it they were more than happy to sign me up for replacement cost rider if i wanted to...
Sorry to hear of your experience. Unfortunately, insurance brokers, like contractors, have their share of "hacks" who do a poor job and ruin the overall reputation of their respective industry. Your broker should have explained/offered Replacement Cost coverage to you when you first set up your policy, not after you had a claim. Furthermore, it isn't your responsibility to figure out if you have Actual Cash Value or Replacement Cost coverage. The same like BamBamm5144, it isn't his responsibility to know if his dump trailer should be insured under an Auto Policy or a Contractor's Equipment Policy. Instead, you both should be able to go to a qualified broker, explain in your own construction industry lingo what it is that you do and what property (vehicles, equipment, stock, etc.) that you own and want to insure. Then it is the insurance broker's job to identify your risk exposures and cover your "stuff" under the right policy wordings with the appropriate extensions, terms and conditions. If there are choices re basic vs. comprehensive, or actual cash value vs. replacement cost; then the choices should be explained to you in layman's terms with a recommendation of which one to choose. While it is never possible to be "insured for everything", you should have a clear understanding of what your policy does and doesn't cover.

Unfortunately, that's the Catch 22. You usually don't find out if your broker was qualified or not until there is a problem at claim time. I totally agree with BamBamm's earlier advice to double-check what your insurance covers, and keep asking questions until you get satisfactory answers. If your broker can't give you concise answers, then it's time to look for another broker.
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Old 12-01-2014, 10:12 PM   #15
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


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Sounds to me like you need a different insurance agent if she couldn't/wouldn't answer some pretty basic questions about your policy. 'Ummm......Maybe' is NOT the answer I want to hear from somebody who is supposedly there to cover my ass if something goes wrong.
Thats the most common misunderstanding. Liability insurance doesnt protect the contractor, it protects the people they are working for or around from risks the contractor creates or problems that they cause.
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Old 12-01-2014, 10:32 PM   #16
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


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Thats the most common misunderstanding. Liability insurance doesnt protect the contractor, it protects the people they are working for or around from risks the contractor creates or problems that they cause.
It protects my pocket book. :
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Old 12-03-2014, 03:51 PM   #17
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


I'm not an expert at this, but this is what I do.

I'm a pest control operator. I have my general liability insurance through a company that specializes in pest control insurance so that when I call in they actually know what I'm talking about. My agent worked for many years in pest control. If I say I was drilling an interior expansion joint on a rickety old house built on four separate contiguous slabs and hit a water line he doesn't ask me what I was doing. I think this is a good way to go, and it doesn't cost me any more than if I was using an insurance company that had no clue about pest control.

As far as asset protection in the event of a lawsuit goes, here's my plan. Don't have any assets. Then there isn't anything to sue me for. Here in the U.S., and even more so in Texas, there are several things that can't be taken from you in judgement. One vehicle per licensed driver, your home and the property it sits on up to a certain number of acres, your retirement accounts such as 401k and IRA, a certain amount of livestock, college savings accounts, and some other things. So, as long as you may be a target for a lawsuit, keep your assets in those protected classes. Instead of saving money in the bank or buying mutual funds, put it into home equity and IRA's. You can even draw out money you paid into an IRA tax free, just not any interest.

I know a lot of that is USA specific, but there may be similar things up there in Canadia.
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Old 12-03-2014, 11:26 PM   #18
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


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Thats the most common misunderstanding. Liability insurance doesnt protect the contractor, it protects the people they are working for or around from risks the contractor creates or problems that they cause.
Huh? Not sure I understand that statement. Isn't the whole point of having GL to protect yourself and your company if you screw up???
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Old 12-04-2014, 11:18 AM   #19
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Re: What Is REALLY Covered In A Liability Insurance Poilicy?


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Huh? Not sure I understand that statement. Isn't the whole point of having GL to protect yourself and your company if you screw up???
No, it protects the customers. Thats why its required by the state. Just like car insurance, liabilty protects others you may harm, collision protects you.

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