Roofers work with equipment worth hundreds of thousands to millions of dollars and take on even bigger liability just by ensuring that the roof will protect the contents of its building.
Naturally, this line of work faces risk which could result in a large number of lawsuits, complaints and other liabilities especially dealing with other people’s property. On these grounds, a roofing contractors’ policy is a requirement for performing any type of roofing work mainly to protect the business from huge loss and even extending its protection for its clients.
Below simplifies what constitutes the package of policies needed for a roofing type of exposure:
First, Open Your Toolbox!
Roofing operations such as roof consultancy, simple roof maintenance and repairs, and new roof installation require to be disclosed when obtaining your liability policy. Time to check your gears - do you perform torch-down roofing or any open-roof projects? You will need to advise your insurance provider of these exposures.
Although some insurance providers may not cover these risks, it is imperative that you disclose these operations and get covered for all exposures your business is facing day-to-day - unless you’re prepared to shoulder these significantly huge claims out of pocket as they arise. Non-disclosure of these operations will most likely result in denied claims just as when you need them covered.
Now, Which Policy Covers What?
- General Liability - this covers third-party property damage and bodily injury caused by roofing work. The standard limit of a GL policy is $1M per occurrence, $2M aggregate. This means a single third-party claim can be covered up to $1M, while $2M can be covered for all accumulated claims per year.
If your employee caused damage to a client’s property while performing roofing work, since this is a third-party’s property damage, the roofers liability policy will kick in to cover your claim. On the other hand, if any of your employees incurred an injury while doing the work, this will be covered by the next most important policy –
- Workers’ Compensation - this is mandatory in almost every state. It protects the owner and/or the employees from work-related injuries. It covers medical fees, lost wages, and even death benefits can be given to the employee’s beneficiary should the work-related incident result in death. However, it is important to note that while injuries incurred at work can be covered by the workers’ compensation policy, remember to bring up which states you perform work in as some WC policies only cover specific states. Another great advantage of this policy is the option for the owners to be included and covered – for a very low increment of cost.
Tip: If you work with subcontractors, make sure to collect and verify their WC policies. Otherwise, you or the business will be responsible. Why? So many businesses fail to renew workers compensation policies due to high penalties incurred from previous years’ audit.
To avoid penalties, remember to disclose the number of employees and its gross annual salary. Failure to collect COIs from 1099s will be considered as regular employees and will therefore sum up the payroll in the audit. The difference of the actual salary and the declared annual salary by the end of the year will garner a refund or an additional premium cost.
- Professional liability - this covers the legal and professional fees associated with lawsuits and orders caused by third-party claims against your professional services. A good example is when you have provided consultation services and the advice or recommendation results in loss to your client. Most likely, they will come back looking for resolution and this policy can help you mitigate or even save you from the possible associated costs.
According to Contractors Liability, this is not usually included in most General Liability policies as this is a separate/standalone coverage. This is highly required for advisory services such as roofing consultancy.
Did you know?
- Professional Liability covers claims against you for negligence, even if you have not made a mistake.
- It also covers work completed worldwide as long as the suit is brought in the US or Canada.
- This includes coverage for services delivered by your employees and temporary staff.
- Commercial Property - this is optional but fundamental in protecting your business’ assets from loss caused by theft, earthquake, fire, and weather-related damages. This covers the property and machinery inside the building the business is located in. Contents such as computers and other tools inside the premise can also be covered but it is important to note that you may be getting coverage for its contents at Actual Cash Value and not Replacement Cost. This means, depreciation costs will be considered to replace or reimburse the covered content. An obvious exclusion is damage caused by wear and tear.
- Commercial Auto - this is highly required for vehicles being used to transport materials, tools, employees, or for any purpose related to the business. While you may be using your personal vehicle on simple business chores, it is still important to obtain a commercial auto insurance for broader coverage since personal auto insurance will not cover claims for incidents caused by -business-related operations. This will cover comprehensive and collision damages. Comprehensive coverage includes theft, weather-caused damages, and its contents.
A commercial auto policy also covers under-insured drivers in case of collision that also comes with liability limits. If there are multiple drivers, this policy has the option to cover “any-driver” for a higher cost compared to the “single-driver” commercial auto policy.
What Are the Exclusions?
It is important to understand the exclusions that apply in a roofing contractor’s business and what most policies do not cover. Some exclusions may make you ineligible for the type of work you do or the claims you submit. Read some of the common exclusions on insurance policies before completing any work rather than submitting a claim and having to shoulder denials in the end.
- Open Roof Exclusions - many insurance packages do not cover any damage to the contents of the building when the roof is opened. Meaning, during repairs, if the roof is open and indoor equipment is damaged from the element, it will not be covered by your insurance.
- New Construction - some insurance packages do not insure new construction work, especially if most of the work you complete is re-roofing. However, specialized agencies have connections ready for when their clients need this coverage. Make sure to connect with a renowned insurance provider and disclose all operations to cover all bases.
- Subcontractor Work - if you are hiring a subcontractor to perform any type of work that doesn’t have their own insurance package, it is possible that your insurance provider will not insure any of their work or yours. Remember to collect and verify certificates of insurance prior to starting the project to ensure operations go smoothly.
Note that the exclusions applied to your roofing contractor’s insurance policy is just as important as obtaining coverage. Whether you operate as a subcontractor or a contractor, the risks involved in this industry will equally require for a tailored policy based on whether your business deals with either more of residential work or commercial; small businesses or industrial projects; and whether you provide services to new construction or repair and remodeling.
You may not get the benefits of a roofers insurance package now - but it is best to have it when you don’t need it rather than NOT have it when you need it most! We hope this article helped you understand more about the coverages and exclusions.