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IPS / Lighthouse Insurance Group Blog: contractors

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image of two contractors shaking handsIn many areas of the United States sole proprietors are not required by law to have liability insurance or workman’s compensation. In order for homeowners to avoid footing the bill in the event of an accident or a renovation gone awry, it is important for consumers to obtain proof of insurance before the start of any project.

It’s important for homeowners to understand contractor liability before the start of any renovation in order to protect themselves. As long as a contractor has general liability insurance, workman's compensation, and there's not gross negligence on the homeowners part then they will not be held accountable in the event of an injury or accidental damage.

Homeowner’s insurance policies generally do not cover incidents involving uninsured and/or unlicensed contractors. Uninsured contractors also tend to be unfamiliar with building codes and are usually unable to apply for permits. When a project lacks the proper permit(s) a homeowner can be ordered to remove or repair the work that has already been completed.

Regardless of the project’s size it is very important to have a written contract that gives a clear scope of all work to be completed.  Once a written agreement is signed homeowners should request the contractor's insurance binder and follow up with the insurance company to make sure the policy covers the each aspect of the project. Some contractors buy inexpensive policies that do not cover bigger projects. For and added layer of protection clients can be asked to be added to the contractors policy as 'additionally insured. Bottom line, a project should not begin until a written contract is signed and insurance is verified by the consumer.

Licensing agencies often maintain a guaranty fund and offer mediation services in case there is a dispute between one of their contractors and a consumer. Licensing agencies can also revoke a dishonest contractor’s license which works to encourage honest hard work from licensed construction professionals. Unlicensed workers go in and out of business readily and can more easily avoid civil suits.

For more information about Michigan contractors insurance, give Insurance Planning Service a call at 800-220-5582.

Let’s say you are going to buy a property or already own a property, and you're interested in getting some work done on it. This could be for a new kitchen, installing a new roof, adding a deck, or any other changes that you may want. Well, the old saying about how remodels usually cost twice as much and take three times as long as you anticipate is not really true. It usually costs three times as much and takes four times as long! But to help you through it all, let’s discuss a few things that can be done to lower your risk on a remodel.

Here’s the biggest risk you assume on doing a remodel and/or comparing bids for work: The owner (that’s you) adding on or modifying the scope of the work. In other words, it’s the “let’s go ahead and take out that extra wall” work order after you’ve signed the rehab contract that will run up the prices. This is because many times, it just costs the general contractor a lot more to do those changes, and/or there’s no competition at that point, so he can just quote whatever price he wants and you have little choice but to accept it if you want the changes.

The way to mitigate this and compare identical bids side by side is to take the time upfront to fully determine the scope of the work you want done so you don’t have change orders during your renovation. Have different contractors, friends, real estate professionals, and designers come in to look at your property and make suggestions. Plus, you should also tour other properties like new homes and similar neighborhood homes to see what changes they’ve made or designs that you like so that your final written request for bids fully reflects all the work you want done on the property. Taking the time upfront to do this will save you a lot of money, stress, and hassle once you dig into the renovations process. With that very detailed and exact scope of work in writing, you’ll get the most accurate cost bids, reducing your chances of running into last-minute changes that can run up your final bill. Now, there are some other things you can do too that will help further reduce your risk.

Make sure to get a lot of references for the contractor you select, and then call those references and ask a lot of questions. You might even want to go see some of the work they’ve done in person to judge the quality of it up close and ensure that it was a true reference and not a sham. You can also check with the Better Business Bureau and the state board that licenses contractors to make sure they are in good standing.

In addition, obtain a copy of their insurance, bonding, and licensing documents – and maybe even call that vendor or agency to confirm they are correct and in force. The bigger the dollar amount of remodel, the more due diligence you want to do on your selected contractor. If you don’t, you might find out the hard way that not everything was in order as it seemed.

Also, you should generally have the general contractor be responsible for managing the entire job. If you piece meal items and something goes wrong, everyone will be pointing their fingers at others, so be cautious. And if it’s a big job, you may want to work out a deal where you pay subcontractors directly or write the checks to both the general contractors and the subcontractor (both parties on each single check). This is because if a sub does work on your property, but doesn’t get paid by the general contractor, you may still owe the subcontractor for the work, so be extra careful on big jobs.

Most people only do one or two remodels in life, so they aren’t very good at contracting and protecting themselves against a very skilled contractor negotiator. But with a little prudence with the advice above, plus talking to your friends, acquaintances, and others who’ve done remodels, will go a long way towards your getting fair comparisons on bids and having a high-quality job done at your property.

For more information about insuring your newly remodeled home or rental, contact the insurance experts at Insurance Planning Service at 800-220-5582 or use our online contact form, today!

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Contractors Equipment

If you’re making final preparations before your company’s busy time of year this spring or summer, it’s the perfect time to evaluate your current insurance coverage.  Columbus, Ohio-based Grange Insurance offers four important considerations for seasonal employers to address before business starts to peak.

1. Am I planning to hire any seasonal employees?
Landscaping companies, construction companies and several others hire millions of seasonal workers each spring and summer. If you’re planning to hire any seasonal employees, including teens, be sure to minimize your risk and properly train all of them on necessary safety procedures. These procedures may include steps to avoid injury and damage to company property.
Review your workers compensation insurance with your agent to be sure that payroll estimates are up to date.

2. Have I purchased any new equipment within the last year?
This may seem like a simple question, but often when people purchase new equipment at the end of a season, they forget to secure the appropriate insurance coverage for these items. After you’ve confirmed these new pieces of equipment are insured, also check to make sure the coverage you do have has relevant limits.  Talk with your independent agent if you are uncertain as to what your policy covers.

3. Am I planning to bring a vehicle or other piece of equipment out of storage?
If so, consider taking these vehicles or other pieces heavy equipment to be serviced before you put them back out on the road. Proper service and maintenance can significantly reduce accidents and other safety hazards. And, if any of these vehicles and the tasks they perform are more specialized, you should also double-check with your agent to make sure you’re adequately covered.  Non-traditional equipment like tow trucks, gravel hauling equipment or construction equipment may not be covered under a standard policy.  Discuss your vehicles and any special equipment attached to them with your agent to be sure you have the correct insurance in place.

4. Have I checked my buildings and various properties for winter damage?
Early spring is the best time to check any buildings or other structures for winter damage. Consider taking a walk around all your properties in an attempt to locate any roof damage, gutter blockages or any other potentially dangerous situations. If you identify any potential issues, address them with your insurance agent immediately.

Call your agent at Insurance Planning Service to review your business policy to make sure it includes everything you need for your seasonal businss. Call today at 800-220-5582 or use our online contact form.

Excerpts courtesy: Grange Insurance newsroom

ContractorsIt is customary for businesses to assume liability in a contract. These contracts are usually referred to as hold harmless agreements or indemnification agreements, an agreement where one party accepts responsibility for the other party’s negligence.  Although it is not standard for an insurance policy to provide liability coverage for anyone else but the policyholder, a typical Commercial General Liability policy does provide some coverage for certain frequently used business contracts.

Here are 5 of the most common coverages:

  1. Lease of premises (but not for liability assumed due to fire damage to a premises you occupy or rent)
  2. Sidetrack agreement
  3. Easement or license agreement (except in connection with construction or demolition operations on or within 50 feet of a railroad)
  4. Indemnification of a Municipality (except in connection with work for a municipality)
  5. Elevator maintenance agreement

There are however, particular conditions contained in the policy that limit the coverage for these contracts.  For example, coverage is not provided to architects, engineers or surveyors for their professional services as a professional liability policy is more appropriate for these occupations.  Furthermore, personal or advertising injury is not covered; just bodily injury or property damage claims are covered.  A personal injury claim is defined as libel or slander.

It is always a good idea to evaluate all of the contracts you sign. This will determine whether you are assuming liability, and if so, to check with your insurance agent if you are covered for such agreements. You can also get a Michigan commercial insurance quote by calling (734) 421-9900.

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Lighthouse Group Main Office in Grand Rapids, MI
Mailing Address | P.O. Box 530009, Livonia, MI 48153

Phone: 734.421.9900 | Toll Free: 800.220.5582 | Fax: 734.421.9911

Also serving these Detroit area communities in Michigan: Livonia, Farmington Hills, Ann Arbor, Southfield, Plymouth, Canton, Westland, Northville, Novi, Dearborn, South Lyon & Walled Lake