Artisan Contractors Insurance

Artisan Contractors are tradesmen who perform only one trade or job and are skilled or trained in their vocation. Examples include, Electricians, Masons, Painters, Paperhangers, Plumbers HVAC Contractors, Tile Setter, Landscaping, Drywall Installation, Cabinet Installation and limited Carpentry operations. Many insurance companies have developed special insurance programs to address the insurance needs of these business owners. Usually, the programs offer broad liability coverage at low rates and are available to smaller companies (less than $5,000,000 in receipts).

The most important policy to an Artisan Contractor is the commercial liability insurance policy. The commercial liability insurance policy will defend you and pay on your behalf when you are found legally liable for bodily injury or property damage that is caused by your business operations. This is a very broad policy and therefore must contain many exclusions. Most of the exclusions are necessary as other policy types are needed to satisfy a more specific insurance need such as: automobile, watercraft, workers compensation, aircraft and mobile equipment to name a few. One of the most significant exclusions is damage to your product. While it covers damage you cause to the property of others, it does not cover loss or damage to your product. The liability portion of personal types of policies (such as homeowners) specifically excludes coverage for any business operations, hence the need for specific business liability insurance. As a tradesman, you will be asked to provide proof of insurance to general contractors and add them as an additional insured on your general liability policy. Generally, this is not a problem and the insurance companies that have developed these special programs, allow automatic coverage (within underwriting guidelines) for this type of request. Additionally, the better insurance programs have built-in coverage enhancements that can include: Personal Injury Liability (libel, slander, false arrest, etc), Per Job Aggregate limits (very important), Employees as Additional Insured’s, Wavier of Subrogation, and Blanket Additional Insured’s.

Anderson Insurance Agency has been insuring tradesmen for almost 40 years. We represent some of the most respected and competitive insurance companies that specialize in contractors insurance programs. Click here to request a business insurance quote or contact us here.

Another important coverage is workers compensation insurance. This covers your statutory obligation to pay employee’s medical bills and lost wages from job related injuries and sickness. In New Jersey, business owners (individuals, partners or members of an LLC) can decide if they want to include or exclude themselves for workers compensation benefits. If you decide to include yourself, you will be covered just as if you were any other employee. You will be charged a premium based on your compensation (same as payroll but includes profit). If you decide not to include yourself for benefits, there is no charge for your compensation. However, General Contractors that hire you might be charged additional premiums on their workers compensation policy, as you are eligible for some benefits on their policy in the event you are injured on their job. If you hire sub contractors, you must be very careful when selecting them and you must make certain that they have workers compensation coverage that includes the owners (individuals, partners or members of an LLC). You will be charged premium just as if they were employees. Premiums for Workers Compensation policies are determined primarily by payroll. At the start of the policy you will be asked how much payroll you think you will incur during the year. You will pay a deposit premium based on your estimate. At the end of the policy, the insurance company will contact you to review your payroll records and general ledger to see how much you paid to subcontractors. If your original estimate was low, you will receive a bill for additional premium. If your estimate was high, you will receive a return premium. Like taxes, it is usually better to over-estimate rather than under-estimate.

Another important coverage is the business automobile insurance policy. It is not a good idea to have commercial vehicles insured on a private passenger automobile insurance policy, as it cannot provide all of the coverage you need. Also, it is not a good idea to insure private passenger cars on a business auto policy unless the cars are actually used in business. Employers must make certain that they also protect themselves from liability that stems from employees using their own vehicles for any errand of their employer. Many companies that have special Business Automobile insurance programs for Artisans offer an enhancement endorsement that can include; Employees as Insured’s, Loss of Earnings, Towing Reimbursement, Wavier of Collision Deductible and Rental Reimbursement.

If an Artisan tradesman owns their own shop they will need additional coverages. Many tradesmen use the garage of their home as their shop to make things or store tools, equipment, hardware or materials. We need to make note of a condition found in any homeowner’s policy that EXCLUDES all coverage for a detached garage that is used in any way for business. In short, the homeowner’s policy will not cover a detached garage that is used in part or whole by your business. To cover this you will need a commercial property insurance policy, which can be written to include the building, contents, business interruption and much more. Depending on how you handle money, you may also need employee dishonesty insurance coverage to protect the owner from the loss of property or money if an employee steals from them. Some insurance companies bundle a series of additional coverages and offer them in one endorsement and charge a flat fee rather than price each coverage individually. These enhancement endorsements can include: fine arts, outdoor property, computers, personal property of others, coverage for cash, mobile equipment, property in transit, sewer back-up, spoilage, lock replacement and a variety of other losses. This endorsement is usually inexpensive. If the building has boilers, a separate form of coverage is needed to cover damage caused to the building as a result of an explosion from the build up of pressure. Also any buildings with expensive or special machinery can purchase separate coverage called Equipment Breakdown Insurance. The standard property policy does not do a good job of protecting this type of equipment or the resultant business interruption.

Artisan Contractors usually have a fair investment in hand, stationary and specialized tools. They can be in the shop, in a truck or on a job. Because these tools move around, the best way to insure them is with an inland marine insurance policy. The commercial automobile policy only covers the truck; it does not cover the tools, materials or equipment inside, so if you want coverage for the stuff inside the truck, this is how you do it. If you have larger pieces of mobile equipment, such as a forklift, backhoe, front end loader, mechanical lift, etc., they can be listed individually on the policy for a lower rate than the other smaller tools which do not have to be specifically listed.

An exposure that is somewhat unique to artisans is materials left on the job. It is not uncommon to find thousands of dollars of material that belongs to the tradesman. Once they are accepted and paid for by the general contractor, they are the property of the GC, but until that happens, they are yours. The policy that covers this material is called an Installation Floater. It covers materials in transit, on the job to be installed and installed and waiting acceptance. It will also cover the damage you may cause to property belonging to others that you are installing (light fixtures, cabinets, plumbing fixtures, stained glass, etc.).

On occasion, Artisan Contractors are asked to provide a performance bond to guarantee that the work they are contracted to do will be performed in accordance with the job specifications and on time. A bond of this type is underwritten by examining the contractor’s financial status, his ability to do the job and his track record on completing similar jobs. This process can take several weeks and, for this reason, a contractor who knows or thinks he will need a performance bond should start the underwriting process sooner rather than later. If a contractor does a lot of bonded work, he can establish a bonding program with his agent and surety and only needs to go through the underwriting process once a year rather than on a per bond basis.

If a contractor wants to carry limits in excess of $1,000,000 the umbrella liability policy is usually the best way to get this coverage. Limits up to $5,000,000 are common. Higher limits are available, but underwriters usually want to see a valid reason why a contractor wants limits above $5,000,000.

Contractors have some exposure to Errors and Omissions. It is common for an Artisan to make a decision in the field (size of electric service, door size, waste or water line size, how to carry a floor or roof load, type of paint to use on walking surfaces, etc.) that can result in a financial loss to the project owner. If a loss results in someone getting hurt, that is covered by the commercial liability insurance policy. If a financial loss occurs (business must close, opening is delayed, things don’t work, work needs to be removed and replaced, etc.) those types of losses are not covered. This type of insurance is nearly impossible to obtain for artisan contractors, so the best advice is to avoid making these types of decisions and get good detailed specifications from the architect, engineer, building owner or general contractor.

Contractors need to be cautious about creating any type of pollution. This exposure can only be assessed after a careful review of your operations. In many cases, coverage will not be available for this risk. The only option may be to implement a program to minimize the risk as you cannot completely avoid the risk and run a business. While coverage is not readily available, contractors can be held liability for a host of pollution events. Oil spills from an on -site fuel tank, removing a fuel tank, pollutants on the job (paint, solvents, asbestos, fiberglass supplies) are just a few examples.

Rented equipment can create its own insurance needs. Contracts with equipment rental companies for lifts, specialized equipment and the like, often require the contractor to provide liability and physical damage insurance for the rented unit. The only safe way to know if you are in compliance with the rental agreement requirements is to call your agent and give him a copy of the rental agreement, BEFORE YOU SIGN IT. Some of these agreements contain hold harmless agreements that cannot be covered by insurance.

Hiring subcontractors is another area of potential problems for contractors. While artisans are not general contractors, there may be times when an artisan hires a subcontractor to help out when he has too much work or needs the expertise of another trade. When this happens, you need to be aware that you are held responsible for the actions of the sub and for overall job site safety. Also, you become responsible for providing workers compensation for any of his employees if the sub has failed to secure workers compensation insurance. You cannot avoid this responsibility. Your best protection is to obtain certificates of insurance for commercial liability insurance and workers compensation insurance, before the sub contractor sets foot on the job site. All certificates of insurance are not the same. It is critical that the sub you have hired has the correct coverage. If he doesn’t, your insurance company may consider him uninsured and charge you a premium just as if he were an employee. This can cost you thousands of dollars in additional premium, which can be avoided by hiring properly insured subs. It is a good idea to have your insurance agent review certificates of insurance that you get from subcontractors before you let them do work for you.

Employers should consider purchasing employment practices liability insurance to cover them for suits from employees alleging wrongful termination, sexual harassment, failure to hire, failure to promote, non-compliance with the Americans with Disabilities Act, and other similar employment actions.

If you offer any benefit pans to your employees, you should consider purchasing employee benefits liability insurance. Sound confusing? It is. That’s why you need to speak with an experienced professional at Anderson Insurance Agency.

This outline is offered as a general description of the kinds of insurance that can be included in an insurance program. It is not intended to replace a comprehensive and personalized insurance recommendation, which can only be offered after a thorough analysis of particular individuals or businesses operations.

Anderson Insurance Agency has been insuring tradesmen for almost 40 years. We represent some of the most respected and competitive insurance companies that specialize in contractors insurance programs. Click here to request a business insurance quote or contact us here.

About Us

Anderson insurance agency was formed in 1967 with its headquarters on Long Beach Island and Manahawkin New Jersey. Our mission is to provide our clients with a choice of coverages from a variety of insurance companies to best fulfill their insurance needs and budget. We pride ourselves on providing superior service after the sale with policy administration and particularly in assisting clients after they have suffered a loss. Our greatest resource is our employees. Our staff of professionals includes Certified Insurance Counselors, Accredited Insurance Advisors,  Certified Insurance Service Representatives and Accredited Customer Service Representatives.

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