The construction industry is looking stronger today after a recession leaving many construction professionals out of business. Fortunately, the industry is on the rebound, so artisan contractors such as painters, plumbers, electricians, carpenters, roofers, and drywall installers are back to work and in need of insurance. Now. For insurance agents assisting clients seeking artisan contractors property and liability coverage, five basic pieces of information about the nature of the client’s business are needed to find the best coverage at the lowest rate: type of work, payroll and receipts, additional insureds, claims history, and use of subcontractors.
Type of Work
- Is the contractor doing work on residential or commercial property? If both, what percentage of the work is commercial or residential?
- Is it new construction, renovations to existing structures, or both new and renovations?
- For new construction, is any of the work on tract homes or multi-family dwellings?
Knowing the type of work performed by the artisan contractor determines the path for finding the right carrier and lowest rate. Since some insurers will not write policies for new construction or residential properties, a broker will not waste time submitting information to those carriers if the contractor is engaged in that type of work.
Payroll & Receipts
- What is the annual payroll by class?
- What are the annual gross receipts by class?
In this case, less is more. Insurance agents do not need to provide detailed information to a broker regarding payroll and receipts. In fact, too much information can often delay the quoting process.
- Will the contractor require any additional insured (AI) clauses?
Providing this information at the very beginning of the quoting process is critical to ensuring an insurance agent can secure the right coverage and the right price. Often, requests for adding additional insureds to a policy come in after the policy is bound. This can lead to higher premiums or even cancellation of the policy because the carrier does not provide coverage for other parties. Not providing this information up front can create headaches for the agents and their clients as it can take much longer to find the right coverage at a reasonable rate.
- Does the contractor have any prior claims?
- If so, how long ago were the claims and what has been done to prevent future claims?
If the contractor has prior claims, please provide details about the nature of the claims. Of particular importance are measures that have been put into place to prevent similar claims in the future. For example, if a plumber has a prior claim related to water damage resulting from an improperly installed toilet, what has the plumber done to ensure this problem will not occur again? Is the employee who made the mistake no longer employed by the plumber? Is the plumber now using better supplies? Has the plumber completed additional training?
- Is any work subcontracted out?
- If so, what is the cost of the subcontracted work by class?
Occasionally, artisan contractors hire subcontractors to assist with a particular part of a job. Agents need to know how often the artisan contractor uses the services of other contractors. Subcontractors must carry their own insurance, which protects not only the sub but the artisan utilizing the sub’s services. Most carriers will not provide coverage for an artisan contractor who uses uninsured subcontractors.
While this is not an exhaustive list of all information necessary to bind an artisan contractor policy, starting out with these basics can make the quoting process more efficient for both the agent and the client. Independent insurance agents are wise to partner with brokers who are knowledgeable of the intricacies of artisan contractor coverages. Ready to work with a broker?Partner with someone who has expertise with your clients’ industries and will provide services after the policy is issued. EFG Insurance has extensive experience with artisan contractors insurance and access to top rated carriers offering competitive rates for a variety of classes. Contact us to learn more about our artisan contract products as well as an array of other commercial, personal, and professional lines coverages. Reach Henry at 281-405-8866 ext 111.
Originally appeared in Atlantic Specialty Lines. Used by permission.