Tag: Commercial Property Insurance

Posted on

HOA Earthquake Insurance – Explained

Many HOA board members are surprised to learn that earthquake coverage is almost always excluded from master HOA policies. Here in California, where earthquakes are more common and can strike without warning, this lack of HOA earthquake insurance often appears as a glaring omission. While individual unit owners can purchase personal earthquake insurance to protect their own belongings, those individual policies will not insure the building itself against earthquake. In the event of a devastating earthquake, an HOA without an earthquake policy will carry the financial burden of repairing the buildings themselves, without the help of an insurer. This can lead to costly special assessments and financial problems of the HOA.

Despite this risk, many HOAs go without earthquake insurance. This is because oftentimes brokers will only present one single expensive quote to HOAs, without much explanation or context, and without thoroughly shopping around to a variety of insurers for competing quotes. This gives HOAs the false impression that HOA earthquake insurance is unaffordable, and that the coverage is “one size fits all”. In reality though, the prices, coverages, and deductibles on these policies can vary widely between carriers, so it’s important for HOAs to work with an experienced broker who can shop around extensively for them, explain the pros and cons of various quotes, and help the HOA determine if earthquake insurance is a good buy.

If you are considering adding earthquake coverage to your HOA’s insurance package, here are some factors to consider:

Price

The cost of HOA earthquake policies tends to fluctuate year to year. While standard property insurance policies have been getting progressively more expensive due to the growing prevalence of wildfires in California, the price of earthquake policies do not align with this trend. There is a vibrant market for HOA earthquake insurance, with many carriers competing with one another for clients. This means that each year, the HOA has an incentive to shop around between carriers, since some insurers may lower their prices in a given year in order to become more competitive than other insurers. A good broker will automatically perform this function each year (this is what we do for our clients).

There are other factors that can lower the pricing on HOA earthquake policies. If an HOA has had retrofitting work done (such as bolting the foundation, installation of steel beams, new foundation, etc.) there is a better chance of finding the most competitive pricing on earthquake policies. That’s why we ask HOAs to tell us about their past retrofit work, since a retrofit can lead to significant discounts on the HOA’s policy. Even if your HOA hasn’t had retrofit work done, it is still worthwhile to find out what it will cost to add earthquake coverage. When we shop around extensively and make insurers compete against one another, we can often uncover a surprisingly affordable offer for earthquake insurance.

Yet another way to keep price under control is to take on a higher deductible. Let’s discuss this in more detail.

Deductible

An important factor that affects price, as well as the quality of the earthquake insurance, is the deductible on the policy. While standard property policies (fire insurance) usually come with deductibles between $2,500 or $5,000, earthquake policy deductibles are significantly higher. The standard deductibles on HOA earthquake policies range from 5% to 25% of the total building value (the cost to rebuild the entire building). So if the entire building would cost $2,000,000 to rebuild, a 5% deductible would mean a deductible of $100,000, while a 25% deductible would mean a deductible of $500,000. These deductibles apply regardless of the amount of damage; this means a $500k deductible could apply even if the damage was only $50k.

Right off the bat, this reveals something crucial about HOA earthquake insurance: it is intended to protect your building against large, catastrophic earthquakes, not minor earthquakes that cause minimal damage. If the earthquake policies come with standard deductibles of $100k, $200k, etc., this means the policy is most useful for situations where the building has suffered significant damage. Minor damage that doesn’t exceed the deductible will not be paid for by the insurer. So if you are considering purchasing earthquake insurance, take a hard look at the deductible, because it will determine the purpose and usefulness of the policy. These policies are for HOAs that want insurance that will repair a severely damaged building after the “big one” hits, not for HOAs that are hoping an insurer will pay for some broken roof tiles after a minor quake.

The deductible you choose will have a direct bearing on the price of the policy. Since there is a huge difference between a 5% and 25% deductible, there is a correspondingly large difference in price between these two options. An HOA can save thousands of dollars in premium by taking on the higher deductible, though that will also mean they will pay for more of the damage when they actually need to use the insurance.

So if your HOA wants to ensure that, in the event of a catastrophic quake, the insurer will pay for the largest possible portion of the repairs, you can opt for a low deductible (which will mean paying a higher premium on the front end). If however your HOA prefers to limit premium costs on the front end, and is comfortable with a policy that would really only be useful in the event of an earthquake that causes so much damage that the cost of repairs overcomes the high deductible, then a 25% deductible is a fine choice. The point is: an experienced broker should discuss these options with you, so you make the decision that best matches your HOA’s budget and goals.

Coverages

Yet another factor that will determine the price and quality of an HOA earthquake policy is the level of coverage in the policy. Just like with deductible, you always have the option to improve or lower the quality of the coverage in the policy, and this in turn will affect the price.

HOA earthquake policies, at their core, are designed to insure all commonly-owned portions of the building. This includes the roof, exterior walls, foundations, wiring, plumbing, boilers, and common areas (gyms, clubhouses). In addition to this standard policy, there are many add-ons that an HOA can consider, such as:

  • Loss of Rents: for HOA-owned rental units, this coverage pays for lost rental income during repairs.
  • Ordinance and Law Coverage: pays for costs associated with bringing damaged buildings up to current code, which can be significant in older buildings. This coverage pays for demolition, increased construction costs, and upgraded materials required by law.
  • Additional Property: non-structural property such as lighting, fences, pools, landscaping, parking lots, sidewalks, and underground utilities (sewer lines, water lines) can be added to an HOA’s earthquake policy.
  • Earthquake Sprinkler Leakage: for buildings with fire sprinklers, this coverage can pay for damage caused by sprinkler lines that break during an earthquake.

Just like with deductible, it is critical to discuss your HOA’s goals with your broker. Do you want a pricier policy that will cover every single facet of your building (including lighting, sidewalks, sewer, lost rents, etc.), or a lower-cost policy that does not include all the extra coverages. An experience broker will be able to go over all the pros and cons of these options with you.

It is also important to note what is NOT covered by your HOA’s earthquake policy:

  • personal belongings of unit owners
  • upgrades to the interior units (new flooring, countertops, etc.)
  • lost rent for rental units that are managed by unit owners
  • loss of use for unit owners (hotel costs during repair, for example)

All of these should be included in the individual unit owner’s personal earthquake policy, which can be added to their “HO6” (condo-owners) policy). Every unit owner should talk to their personal insurance agent about adding personal earthquake coverage to insure their own belongings.

Conclusions:

  1. Work with an experienced broker who can explain all of the facets of your policy, and understands how the factors above can influence the price of the policy and the quality of coverage.
  2. Make sure your broker shops around for you. The more carriers your broker approaches, the more you will benefit from competition between insurers. If your broker offers you one single quote with little explanation of the coverages and no mention of which carriers he/she approached, it might be time to work with someone more experienced in the earthquake insurance arena.

Here at Mighty Oak, our brokers are experts not only in shopping around for high quality earthquake insurance policies, but also in explaining those policies in ways that actually make sense. We won’t use jargon or (even worse) throw a single, expensive option at you without explanation. We will check the whole market on your behalf, and make sure you fully understand what you are buying.

Reach out today to explore earthquake insurance options for your HOA.

Posted on

Insurance for Non-Renewed Apartment Buildings

A record number of California apartment buildings have had their insurance non-renewed this year. Some big-name carriers are non-renewing every apartment building in the state. Though ultimately this turmoil is driven by the large number of recent wildfire claims in CA, apartment buildings in the heart of urban centers such as San Francisco and Los Angeles are being non-renewed all the same. Owners of apartment buildings can sometimes feel overwhelmed by this upheaval, especially if they’ve enjoyed stable insurance for the past few decades. If your apartment building has been non-renewed, what you need is a good insurance broker to help you replace that policy. We can help!

At Mighty Oak, our brokers understand how to navigate the nuances of a complex market, and the challenges of owning and managing multiunit apartment buildings. We understand that you face unique risks with tenants living in your building. Our apartment policies include property coverage for the building as well as landlord liability coverage. Our goal is to match the coverages that are on your current (non-renewing) policy, help you protect your investment, and satisfy your lender. And for the individual renters who need insurance for their personal belongings, we work with insurance agents who specialize in personal insurance as well.

If your current insurer has non-renewed your apartment building’s insurance policy, we will work to replace it with a policy comparable to what you previously had. If your price has risen considerably, we will work to find you a lower-priced quote. Along the way, we are happy to offer advice and guidance for steps you can take to lower your future insurance costs and widen your insurance options. We can even help if your non-renewal is due to a history of claims. We work with insurers of all kinds, including those who specialize in “distressed” properties, meaning properties that have had a series of claims, and even currently-damaged buildings and buildings under repair. We have options to insure apartment buildings of any size, and can even find you a quote if you (the owner) occupy one of the units. 

Our brokers specialize in apartment building insurance in California, Florida, Texas, Nevada, and we are licensed in other states as well. We have been especially successful with non-renewed apartment buildings in urban areas, and apartment buildings facing a steep insurance price increase.

Contact us today to speak with a broker!

(We also specialize in finding insurance for non-renewed HOAs).

Posted on

How to find insurance for HOAs in California

The California insurance market is in a state of turmoil. A handful of big-name carriers are refusing to issue any new quotes in the state, while others are non-renewing existing clients. For small Homeowners Associations (HOAs), this can be a stressful time to seek insurance. Many HOAs (even those in urban areas) have been non-renewed by their long-time carriers, and must go out on the market for new insurance at a time when options seem limited and prices are rising. We can help! We specialize in HOA insurance in California, and can help non-renewed HOAs get new policies!

At Mighty Oak, our brokers understand how to navigate the nuances of a complex market, and the realities of shared homeownership. We understand that HOAs are unique, and as brokers we know how to properly insure them. Our master HOA policies include property coverage for the building as well as liability coverage for the HOA itself. We can also often add coverages like equipment breakdown, directors and officers coverage, sewer back-up, and crime insurance. Our goal is to match the coverages that are on the HOA’s current (non-renewing) policy. And for the individual condo owners who need insurance for their personal belongings, we work with insurance agents who specialize in personal insurance as well.

If your current insurer has non-renewed your HOA’s insurance policy, we will work to replace it with a policy comparable to what you previously had. If your price has risen considerably, we will work to find you a lower-priced quote. We can help even if your non-renewal is due to a history of claims. We work with insurers of all kinds, including those who specialize in “distressed” properties, meaning properties that have had a series of claims, and even currently-damaged buildings and buildings under repair.

Our brokers specialize in HOA insurance in California, Florida, Texas, Nevada, (and we are licensed in other states as well). We have been especially successful with HOAs in urban areas who have been non-renewed or whose prices have risen dramatically.

Reach out today to get a quote!
Posted on

Damaged Building Insurance

How to Insure a Damaged Building and/or a Building with Claims.

Is My Building Uninsurable??

It can be a frustrating experience to hear that your building is “uninsurable”. Oftentimes when a building has some unrepaired damage, a history of claims, or some other problem, many insurance professionals will simply shrug and say, “Sorry your building is probably uninsurable”. If you ever hear this, it usually means that that insurance professional actually doesn’t know how insure such a building. No building is uninsurable.

There are thousands of insurance companies in the US. For every possible type of property, there is an insurance company (or several) that specialize in insuring it. It is crucial to work with a knowledgeable broker who not only knows which carriers will insure damaged buildings, but also which coverage need to be added to the policy to fully protect you, the owner. This article will dive into how to properly insure a damaged building and/or a building with claims.

Insuring a Damaged Building

When a fire burns a portion of a home, or a burst pipe floods a couple floors of an apartment building, a common insurance scenario plays out. The owner files a claim with his/her insurance company, and that carrier pays the claim to cover the repairs. But then, upon renewal, the carrier cancels the policy and tells the owner to find insurance elsewhere. This can happen even while the building is still being repaired, or even before repairs have begun. The previous carrier may still be paying to repair the property, but meanwhile the building owner needs to seek new insurance for the now damaged property, in order to cover the property going forward.

Why does this happen? Insurance companies exist to make a profit, and when there is a claim they lose money. Insurance companies do not want to insure unprofitable clients. This is the basic rule that governs what an insurance company is willing to insure.

Simply put, when your insurance company starts losing money, your insurance coverage is in danger. It could be cancelled or non-renewed anytime at their request with only 30 days notice. This not only means that you need to shop for insurance again – it means that insurance has become much harder to find, because your building is damaged, and your claims history follows you.

Damaged buildings need insurance during the repair process. Vandalism, water damage, and fire damage are all real concerns while a building is being repaired. There are also other risks to consider when contractors and construction people are coming in and out of your building every day during the repair. Due to the increased risks of insuring a damaged building or a building under construction, many standard [sg_popup id=”907″ event=”click”]”admitted carriers”[/sg_popup] will likely decline to quote.

However there is a whole galaxy of options outside of the admitted market. These carriers specialize in insuring buildings that, for one reason or another, have been rejected (or priced out) of the admitted market. This includes damaged buildings, buildings with a history of claims, buildings under construction, and other unique situations.

Not every insurance professional knows how to access this portion of the insurance market. In fact, many insurance pros ONLY know how to shop the admitted market (or only have access to one single carrier); when those limited options offer only declines, that insurance pro waves the white flag. This can lead a building owner to (incorrectly) believe that their property needs to remain uninsured for the unforeseeable future.

Here at Mighty Oak, we know how to deal with these situations properly. We have relationships across the [sg_popup id=”907″ event=”click”]admitted AND the non-admitted markets[/sg_popup], so we are able to provide quotes to any property owner who needs insurance, even those with damaged buildings.

We also have the experience to know which coverage must be added to a damaged building’s insurance policy in order to fully protect the owner. For example, a policy for a building under construction should probably include a coverage such as [sg_popup id=”258″ event=”click”]Builder’s Risk[/sg_popup], while a policy for a vacant building needs to have the Vacant Property Exclusion removed prior to putting the policy in force. These (and other details) are what we look for when we help an owner of a damaged building acquire insurance.

If you own a damaged building, contact us to learn more.

Insuring a Building with Claims

What if your building isn’t damaged at all, but instead just has a long history of claims?

Earlier this year a homeowner contacted us with a predicament: her homeowner’s insurance had been cancelled after she filed one too many claims. Her house was in pristine condition, worth more than $2 million, yet it seemed like nobody could get her a homeowner’s insurance quote. Her claims history had made her “uninsurable” (or at least that’s what she feared).

For over ten years she had been with a standard carrier, just like all her neighbors. But one day a storm damaged her windows and caused a leak, so she filed a claim. The insurance company paid for the repairs. Soon after that, a tree fell on her fence – which meant another claim and another pay-out by the carrier. Finally a couple months after that, the neighbor’s landscape contractor backed over their lawn irrigation equipment and broke the sprinkler system. This claim cost the carrier another $5,000. Their insurance company canceled her policy about a month later, and their agent had no options to replace it. 

When she visited another broker, he checked with all the standard, admitted carriers, and received nothing but declines. Why? Because with every carrier he checked, he was required to explain her claims history. When these carriers heard about the claims, they refused to take on the risk.

None of these these claims were catastrophic, and none were wildly expensive. All were reasonable claims that any insurance company should expect to pay for. Yet just the fact that there were three claims in one year was enough for the client to be shut out of the standard market, even though her house was in excellent condition. When her broker received nothing but declines, he told her she may be uninsurable.

Of course, he was wrong; she was very much insurable. When she was referred to us by a friend, we performed a diligent search of carriers that are willing to take on clients with a history of claims. We found her some quotes that fully insured her property, and she is now insured once more.

Our brokerage specializes in helping owners of “distressed” properties, whether that means buildings under construction, damaged building, or buildings with a history of claims. We can even find insurance for buildings where damage has yet to be repaired. There is a carrier for every situation; no client is uninsurable. We will put our deep knowledge of the insurance market to work for any client that needs insurance, especially those who have been turned away by other brokers.

Are you “uninsurable”? Contact us today and we’ll see about that.

Posted on

Insuring a Coworking Space (A True Story)

An owner of a business that offers coworking space asked us recently to quote his insurance because he was planning to open a second location.

What we uncovered through working with him was an alarming reality that applies to coworking businesses across the country: their insurance might be based on a falsehood, and therefore worthless.

His business had been operational for about a year when we met him. His previous agent had written him a Business Owner Policy (BOP) with a well known standard insurance carrier.

This policy provided ample coverage for his business at $2m of liability coverage per occurrence and more than $550,000 of property insurance for a premium of approximately $2,000 per year. This seemed like an incredible deal.

He was planning to open a second location nearby, so it felt like an opportune time to shop his insurance out and get competing quotes for him.

Our thorough check of the “standard” insurance market turned up some worrying results:

  • Travelers – Declined due to class of business
  • CNA – Declined due to class of business
  • Liberty Mutual – Declined due to class of business
  • Allied/Nationwide – Declined due to class of business
  • USLI – Declined due to class of business
  • Guard – Declined due to class of business

Each of these carriers informed us that they have a strict rule not to underwrite coworking spaces at all. This perplexed us. The client’s carrier, seemed willing to provide insurance for our client, while all other similar carriers declined. But since his carrier was apparently willing, we resolved to simply update his existing policy.

Initially the carrier was willing to add the second location and meet the insurance requirements for his new location.

However, when we called to push the changes through, his carrier informed us that additional underwriter review had been triggered.

After only a few minutes of review the underwriter explained that we had a problem: the original agent had submitted an application that had listed their services as Answering Service – nothing more. While answering services are one of the services that this business offers, they also offer many more including coworking space rentals, PO box rentals, desks by the hour and virtual assistant services. 

It was for this reason that his carrier determined to cancel his policy for both locations – effective only a few weeks before he was set to open his new location!

While we searched for a replacement for him, he searched on his own and asked his coworking business colleagues for help. Throughout this process we both learned that most coworking space businesses are insured with similar standard carriers, including those previously listed.

This led to an alarming discovery. If what these carriers told us is true – that they do not insure coworking rental businesses – then it would appear that anyone who owns a coworking business AND has a policy with these carriers may not be properly insured.

Inexpensive insurance may seem attractive on the surface. But if your insurance company refuses to pay a claim in a critical moment, that insurance is a worthless contract. Your business might as well be uninsured when it comes to coworking space.

In the event of a bad claim, especially one that touches the coworking aspect of the business, coverage may be denied or significantly reduced if the insurance company does not have a clear picture of what your business actually does.

In our example, our client’s previous agent told the carrier that the client was only an answering service, NOT a coworking space. Therefore the carrier misunderstood the nature of the business they were insuring, and unknowingly offered insurance to this business against their own underwriting rules.

In the end, we were able to satisfy our client’s insurance requirements and get him a policy with a different carrier that was comfortable insuring coworking spaces (and we made sure the carrier was aware of all the facets of his operation). If it turns out that your insurance company thinks you are an answering service (or some other incorrect class of business) instead of a coworking space, drop us a line. We can help you get the insurance you need to actually cover your operation – coworking spaces included.

We have the knowledge of the market to know which insurance companies actually want to insure coworking spaces. These companies often require more follow-up, detail, and interaction with the client than most insurance agents are willing to provide. We are willing to put in the time necessary to make sure our clients’ insurance gets done correctly. 

Posted on

How to Properly Insure a Mixed Use Apartment Building

A mixed use apartment building in Chinatown, San Francisco

What is a “mixed use” property?

A building is “mixed-use” if it has businesses on the street level and apartments up above. Really, a mixed use building is any building that serves multiple functions. It might be part office and part retail, or part government building and part cafe, or part residential and part commercial. Walk around any major city – such as San Francisco – and you’ll see these types of buildings everywhere, especially mixed use apartments. Here at Mighty Oak, we specialize in mixed use property insurance.

Another mixed use apartment building in Chinatown, San Francisco

The Challenge of Insuring Such a Building

Mixed use apartments, which generally feature apartments on top and businesses on the street level, are ubiquitous in San Francisco. They also happen to be a real pickle to insure properly. Every occupant of this building needs a different kind of insurance: the business owner needs to insure his business, the residential tenant needs to insure his belongings, and the building owner needs to insure the entire property.

In the event of a disaster like a fire, it is crucial that all three of those areas (business, tenant’s belongings, and the building itself) have policies that will pay out! Often times the business owners, tenants, and landlords aren’t entirely clear on which types of insurance they actually need, or what it means to be “properly covered”. For example, if a building owner insures his building, it is important for the business owner tenant to understand that his business property is likely NOT covered at all.

Often these buildings contain many different tenants and businesses that each have their own unique insurance needs. It is absolutely essential to work with a competent insurance broker who can provide insurance options for the business owners, the tenants, and the landlord. Ideally this broker could also educate the whole crew on which occupants are responsible for which insurance pieces.

This iconic corner in North Beach, San Francisco is full of mixed use apartment buildings.

How to Properly Insure a Mixed Use Building

First, we should consider the building itself. Each building needs to have its own Landlords Policy, which will cover the actual building. As the name of the policy implies, this piece is the landlord’s obligation to purchase (and it is the landlord who gains the protection). If the building is damaged or destroyed, this policy will pay back the owner of the property for repairs. Sometimes when an older building is damaged, the city steps in and demands that the property be brought up to code (such as a mandatory earthquake retrofit). This insurance policy can help cover that cost as well. It will even cover lost income, since the owner may lose some rent payments if tenants have to evacuate during repairs.

This policy is crucial for the owner in other ways. For example, if a visitor slips in the stairwell and decides to sue the property owner, this policy will pay the legal bills and damages. If a tenant decides he’s been wrongfully evicted and chooses to sue, this policy may cover the landlord’s legal fees. In other words, the building is the landlord’s business, so it should be insured in almost all the same ways a business would be insured: protect the property itself, protect the owner’s income, and protect the owner from lawsuits.

A typical mixed use property, with apartments upstairs and a bar downstairs. The owner must insure this entire property, since he owns the whole building.

Now that the building itself is covered, the rest of the building’s inhabitants (both residential tenants and business owners) need their own separate insurance. Take the example below: we see that the red units are residential units and the blue units are retail commercial units.

Each occupied unit needs its own insurance coverage. But wait – haven’t we already insured the building? Why should each tenant have to insure their own unit? Actually the tenants do not need to insure any part of the building itself, but rather their own belongings inside their unit. The Landlord’s Policy will not cover any of the tenant’s belongings, and in the event of a fire, the tenant will not be reimbursed for lost items unless he carries his own separate Renter’s Policy.

A Renter’s Policy is also known as “contents coverage”, or insurance coverage that does not cover the structure itself, but instead the contents of each unit. Every residential tenant can cover his own belongings without having to pay for coverage for the building that he does not own. These policies are designed to protect the tenant in case something like a burst pipe destroys their belongings. A good Renter’s Policy can even cover a tenant’s liability, say if the tenant accidentally starts a fire that destroys the neighboring tenant’s belongings. The combo of a Landlord’s Policy and Renter’s Policy ensures that the building itself and all the stuff inside it are protected from accident or disaster.

What about the businesses on the ground floor? They are also tenants, but they don’t live in their unit. These commercial tenants need policies that cover their:

Business Property – Covers their equipment, tools, and other contents of the commercial unit, in case they need to be replaced after an accident or disaster.

General Liability – Covers the business owner in case a customer gets injured or someone else’s property is damaged during the normal course of business. If someone slips inside the business and decides to sue the business owner, this policy will pay his legal bills.

Workers Comp – If an employee is injured on the job, this policy will pay the medical bills. This type of insurance is legally required for any business that has at least one employee.

Just like the residential tenants, these business owners do not need to cover any part of the building itself, but only their own businesses inside their unit

This is why a mixed use property is the perfect intersection of personal insurance and commercial insurance, all in one property. A good broker can work with the entire building to cover the owner and every tenant in a way that protects everyone without forcing anyone to pay for insurance they don’t need.

Reach out to us for a quote, whether you are a building owner or business owner.

Posted on

How to Properly Insure a Handyman

A professional handyman has to be pretty adaptable! Installing a set of cabinets, repairing some drywall, painting a mailbox, realigning a garage door, pouring some concrete, sanding a porch, assembling furniture, removing a door frame, building a shelving unit, remodeling a living room, unclogging a drain, hauling some junk… it’s all part of the job. The more skills a handyman can master, the more jobs he can say yes to.

A handyman’s business insurance needs to be just as adaptable. The more jobs a handyman can take on, the more varied the risks that come with those jobs, and the handyman’s policies MUST cover all those risks in order to be effective (otherwise what’s the point of insurance?). Therefore it is crucially important that the handyman work closely with a business insurance broker to craft an insurance policy that is tailored to the handyman’s actual needs. Being “properly covered” doesn’t mean just piling on more and more insurance (with higher commissions for the broker); it means creating a set of policies that fit a client’s business risks exactly.

“Do I really need insurance?”

The first question many handymen (and other business owners) ask is, “Do I really need insurance?” A good way to answer that question is to think about the risks a handyman takes on just by doing his job, AKA the every day accidents that could result in the handyman having to shell out lots and lots (and lots) of money. A newly installed air conditioning unit could fall and injure a child. A handyman’s assistant could slip off a ladder and break his leg. The handyman could get T-boned while driving his truck to a job site. A client could trip over a peeled-up carpet and decide to sue. A whole set of new tools could be stolen from the truck. And many many more.

These sorts of accidents can happen to anybody, even the most skilled operators. They are the risks of doing business. What insurance does is transfer that risk off of the handyman’s balance sheet and onto the balance sheet of an insurance company. One single lawsuit or car accident can put even a well-established handyman out of business. One theft can set a handyman back for months. By purchasing policies designed to cover these mishaps, the handyman can sleep at night with the knowledge that no matter what goes wrong, he won’t have to pay for the damage. That is, as long as the risk is covered in the policy.

This is why it’s so crucial to work with an insurance broker who isn’t just trying to close a deal quickly for a fast buck, but instead wants to learn every facet of the handyman’s business before agreeing to write the insurance policies. The cost and scope of the insurance will depend on what kind of work the handyman does, whether he has employees, who his clients are, and how large his operation is. If the handyman does more dangerous work, the cost will be higher, but so will the coverage. All of this should be discussed before the broker even attempts to get quotes.

One added perk of insurance: Many clients require certificates of insurance before work can begin. These clients may include apartment complexes, bank-owned properties, clients asking for electrical or plumbing work, and clients who simply want to ensure that if an accident does occur on their property, the handyman will have the resources to pay for the repairs. For these clients, a handyman without insurance is simply unhireable. Therefore proper insurance coverage could lead to more (and better paying) jobs.

Remember: Even if you are very careful and diligent at job sites, accidents can still happen. Insurance protects you and your business from outcomes that are out of your control.

“What types of insurance do I need?”

The types of insurance a handyman might typically need include:

[sg_popup id=”246″ event=”click”]General Liability[/sg_popup] – Protects him from paying repair costs in the event that the handyman accidentally harms a customer’s home, appliances, or other property. If the customer himself is injured in an accident, this insurance can cover small medical bills regardless of who was at fault, and large medical bills if the handyman is found to be liable. Should the accident lead to a pricey lawsuit, this policy could cover all the defense costs. A General Liability policy can even pay out if there is a dispute over the handyman’s finished work – this is known as “Completed Products Coverage”. Since so much of his work is performed within a customer’s home, a professional handyman must have protection from lawsuits of all varieties. A G.L. policy provides just that, so a handyman can do his job without worrying that one mistake will cost him his business.

Coverage of tools and equipment (also known as [sg_popup id=”557″ event=”click”]Inland Marine[/sg_popup]) – If his tools or equipment are stolen, damaged, or lost, this policy will cover the loss. Imagine the cost to replace an entire set of tools if they are destroyed by fire or some other accident. Inland Marine will not only pay to replace the set, but it may also cover lost income if the accident forced the handyman to suspend his operations for a time. And to top it all off, Inland Marine coverage follows the handyman wherever he takes his equipment (unlike a [sg_popup id=”256″ event=”click”]Commercial Property[/sg_popup] policy, which covers only equipment and property that stays in one place). Since most handymen do a lot of traveling with their tools, every piece of a handyman’s equipment should be insured with an Inland Marine policy.

[sg_popup id=”249″ event=”click”]Workers Comp[/sg_popup] – If the handyman has employees, this insurance is legally required. It covers medical bills, lost wages, and even death benefits if employees are injured or killed on the job. The more dangerous the work, the more expensive this policy is likely to be. But don’t take that to mean it’s a policy that can be skipped. Aside from the legal requirement, Workers Comp is an absolutely crucial policy for a handyman to carry, just for the sake of his business. Given the strenuous, physical nature of the work, the threat of accidental injury is always present. Workers Comp will not only cover the medical bills for the employees (and the owner if he wants to be included), but it also protects the owner from lawsuits.

[sg_popup id=”251″ event=”click”]Commercial Auto[/sg_popup] – Since being a professional handyman involves the daily operation of a work vehicle, having a strong Commercial Auto policy in place is vital. Whether driving to a job site, picking up supplies, backing into a customer’s driveway, or popping out for coffee, every moment spent on the road exposes a handyman to risk. Without a Commercial Auto policy in place, the handyman is on the hook for any harm that comes to people or property as a result of his vehicle (whether the business owner or his employees are driving). If a handyman’s truck backs into some scaffolding, gets T-boned at an intersection, rear-ends a car in traffic, or strikes a pedestrian, this crucial coverage can pay for the damages. It can cover medical bills, replacement of damages property, legal fees, and even repairs to the handyman’s own vehicle should he be hit by an uninsured driver.

The Shield

These policies combine to form a shield that protects a handyman from just about any catastrophe that could strike his business: injured workers, a car accident, a fire at the shop, theft of tools, damage to a customer’s property, a natural disaster, and even lawsuits from dissatisfied customers. This is what we call a “well-tailored” policy, rather than “one size fits all”. It doesn’t just tack on a bunch of insurance a handyman doesn’t actually need; instead it is designed specifically for a handyman, and covers exactly the risks he might face.

To compile such a perfectly tailored policy, it’s usually best to work with a business insurance broker, because brokers can search the whole market for the best deal. Brokers have access to insurance carriers that specialize in handymen and tradesmen of all kinds.

Want to find the right insurance for your business? Drop us a line! You can speak to broker, ask a question, or even suggest a future blog post.

Reach out to learn more, or to get a quote today.