sub-contractors Archives - Mighty Oak Insurance Services

February 13, 2024February 13, 2024

Finding the right insurance for an earthquake retrofit contractor

It can be tricky to find the right insurance for an earthquake retrofit contractor, but we can help!

A general contractor recently called to ask if we can help with his insurance. He is a licensed earthquake retrofit contractor who has been working in construction for decades. He was struggling to find insurance that would actually cover his core operations: earthquake retrofit and foundation repair. When he met us, he had just purchased a policy that officially offered him no coverage for his main services.

Here was the message he had just received from his current broker:

Per our discussion, the policy that you purchased with us doesn’t cover foundation repair or earthquake retrofitting of any type. Unfortunately we must cancel your policy immediately. We will be unable to provide a replacement policy for you. We are sorry for the inconvenience.

At that moment the contractor had many retrofit jobs running simultaneously across the Bay Area, so this insurance problem had to be corrected immediately.

How did he find himself in this situation? The reason is because many brokers who work with contractors use instant-quoting portals that generate quick and cheap insurance quotes. These quotes are handy because of the speed and price, but they are usually riddled with exclusions. For a contractor who performs standard remodel work, these sorts of quotes might be the perfect fit. But for an earthquake retrofitter, the exclusions render these cheap quotes worthless.

Here’s an example of such an exclusion:

Even though that exclusion for seismic retrofitting work seems pretty obvious, it’s still easy to miss it if the broker doesn’t read the quote carefully. Sometimes the exclusions are even more subtle, like this exclusion, which is often buried on page 80-something of the policy:

The contractor who called us had purchased a cheap policy that his broker had found for him instantly, via a portal that did not ask too many questions. The broker did not review the exclusions before starting the insurance, and carelessly sold a low-priced policy that contained an exclusion for all kinds of retrofitting work. A few weeks later, when the contractor was reviewing his new policy, he discovered the exclusion and called his broker. Only then did the broker realize that the insurance he had sold was worthless. The contractor realized, to his dismay, that he had been operating essentially uninsured for the past three weeks.

We were able to fix this problem for the earthquake retrofitter because we are experts at construction insurance of all kinds. We always read through the policy language before we put a new policy into force, and we know which exclusions to look for. We also know which insurers specialize in specific areas of construction which are often excluded on standard policies, such as earthquake retrofitting, bridge work, utility work, new construction, and remodel work performed for large HOAs. We made sure that the retrofitter got a liability policy that insured his actual operations and did not include any worrisome exclusions, so he could continue with his jobs uninterrupted.

If you are an earthquake retrofit contractor, or any kind of contractor who has struggled to find proper insurance, please reach out. We can help with general liability, workers comp, commercial auto, bonds, and any other kind of construction-related insurance.

Most importantly, we will make sure the job is done right the first time.

Reach out to a broker with any questions

December 30, 2019June 7, 2020

How to Properly Insure a Landscape Architect

The Challenge of Properly Insuring a Landscape Architect

As a landscape architect, you have unique insurance needs. On one end, you create designs and conceptual drawings that will later guide a general contractor through a build-out. It is crucial to start with insurance that protects you in the event of a design-related lawsuit, whether the design is actually flawed or whether the lawsuit is frivolous.

This design insurance is not enough however, because you also regularly enter clients’ homes, and (depending on the scope of your operation) perhaps do some gardening, or even run a full design/build operation. These features of your business require insurance that protects you in the event of property damage or accidental client injury. The necessity for these two different types of insurance (the design side and the property damage/injury side) is what makes landscape architect insurance so complicated, and reveals why it is so crucial to work with an experienced broker.

One additional detail to consider, which makes these types of policies even more interesting: What is the relationship you have with the general contractors, tradespeople, and gardeners who build and install your designs? Does the general contractor hire you directly, or are you hired by the homeowner? Do the gardeners who install the plants work for you as sub-contractors, or are they hired by the homeowner? Or do you install the plants yourself?

These questions are critical, because they help determine which coverages need to be included and which are unnecessary. For example, if you hire on a sub-contractor to install the plants, we would need to make sure that work done “on your behalf” is not excluded from the policy. If, however, you never hire any sub-contractors, and you leave the hiring of tradespeople to the general contractor and the homeowner, then we can leave extra coverages for sub-contractors out of your policy, which will likely make it cheaper.

The real point is this: tailor your insurance contract to match your actual operation, so that you get all the coverages that you need, and none of the ones you don’t. Bottom line: you want any legitimate claim you file to be paid by the carrier. The best way to achieve that outcome is to craft a policy that takes all facets of your business into account.

Building a Complete Policy

In order to fully protect a landscape architect, the insurance policy will likely need to contain all of the following:

Errors and Omissions Insurance
- This is essentially lawsuit insurance. If you are ever roped into a lawsuit, whether it’s frivolous or valid, in most cases E&O insurance will pay for court attendance costs, lawyers fees, as well as damages you are ordered to pay. This insurance is designed to covers costs that arise from honest mistakes and litigious clients.
- Example A: You complete a design for a homeowner in Los Angeles, who then hires a general contractor to build the garden according to your design. However, during construction the G.C. accidentally breaks a water pipe and floods the house. The homeowner sues both the G.C. and you, claiming that your design was partially to blame for the accident. Though your design was fine and you were not to blame for the accident, you still must hire an attorney, travel to L.A., and appear in court to clear your name. Your errors and omissions insurance covers the legal fees and travel/hotel costs for the duration of the lawsuit, even though the lawsuit was frivolous.
- Example B: An error in one of your designs is not detected until the garden’s construction has already begun, causing delays and thousands of dollars in extra construction costs. Your client is forced to pay these costs to the G.C. in order to complete the job, so the client later sues you for the extra costs, claiming it was your mistake that caused the mishap. Your E&O insurance pays for your legal fees, court costs, and the settlement you reach with the disgruntled client.
General Liability Insurance
- While E&O covers your “professional” work (designs, drawings, etc), a general liability policy pays in the event that you physically injure someone or damage property. This is worksite insurance, and more often than not a general contractor will require you to carry general liability insurance before you are even allowed on a job site. The larger the project, the more common this requirement will be.
- Example A: You are visiting a job site where a large backyard is under construction, and while walking with the homeowner you both slip down a muddy hill and fall 8 feet into a trench. The client breaks her leg, and claims that you are liable for the injury. Your general liability policy pays for the legal fees and whatever damages or settlement you reach with the injured client.
- Example B: If you run any sort of design/build operation, or even offer gardening services, a general liability policy is crucial for any random accident that could lead to bodily injury or property damage. A child grabs your gardening shears, a tool accidentally breaks a window, a misplaced dig severs a pipe, etc etc. A standard G.L. policy would cover any of these claims up to a $1 million! Without that policy, you pay out of pocket. So for any business owner who finds him/herself in a clients home, a G.L. policy is critical.
Anything else?
- If you have employees, you need workers comp. If you have a work vehicle, you need commercial auto. If you hire subcontractors, you need a broker who will show you how to check their insurance, so you know that if they make a mistake it won’t cost you your business. If you are a sub-contractor yourself, you need a broker who can make sure your policy satisfies the typical insurance requirements most general contractors ask for (additional insured endorsement, waiver of subrogation, etc). Whatever your operation looks like, there is a policy out there that will cover you fully.

The first step is always a conversation with an experienced broker. If you need insurance and want to make sure you get a policy that is tailored to fit your operation perfectly, please reach out. If you have any questions we haven’t answered yet, we are happy to chat.

If you are an established landscape architect and you’d like to learn more about what your current policy language actually means, reach out for a free review of your insurance contract. Even if you aren’t our client, we want to help you understand your current coverage, and make sure that you are getting what you really need out of your insurance policy.

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

March 8, 2019December 28, 2020

Vendor Check

One of the best ways to protect your business is to make sure your sub-contractors and 1099 employees are properly insured.

It is crucial that your vendors, 1099s, and subcontractors be properly insured. If they ever accidentally cause damage to a person or property, fail to live up to a client contract, or suffer an injury on the job, their insurance situation could have a serious impact on your business. Ensuring that they carry General Liability , Workers Comp , Commercial Auto , and any other type of insurance you deem necessary, is the best way to protect your business.

After all, if your uninsured sub-contractor makes a costly error or injures someone, you will likely pick up the tab. For example, ABC General Contractor brings in a subcontracted electrician to install some wiring in a remodeled house. This electrician accidentally backs his truck into the house, causing thousands of dollars of property damage. The homeowner sues ABC General Contractor, who discovers too late that the electrician did not carry Commercial Auto coverage. The general contractor will likely foot the bill, and try in vain for years to get repayment from the electrician. Had the G.C. enforced strict insurance requirements on his subcontractors, the insurance company would have likely paid the claim.

Don’t take on the financial risk of having to pay for others’ mistakes! Make sure your subcontractors and 1099s are fully insured. Otherwise they transfer all the risks of running their operation onto your books.

An even more common example: a sub-contracted painter is brought on-board by a general contractor and paid in cash (no written contract, no insurance requirements). The painter’s assistant falls off a ladder and breaks his legs, resulting in $65,000 in medical bills. Since there was no written contract and no Workers Comp insurance in place, the painter’s assistant decides to sue the general contractor for repayment of his medical bills (the G.C. is more likely to have the money to pay than the painter). The general contractor is forced by the court to pay the bills, and fined an additional $100,000 for operating without Workers Comp! Even though the painter’s assistant was not really the G.C.’s employee, the G.C. ended up paying the entire mount, all because the G.C hired an uninsured subcontractor. If the G.C. had required his subcontracted painter to carry Workers Comp, the insurance company would have paid the bills for that employee, and a lwsuit could have been avoided. Instead the G.C. hired the painter “off the books”, and it cost him dearly.

Every subcontractor with even one employee must carry Workers Comp. Any sub with a truck must carry Commercial Auto. And every sub need a General Liability policy. A general contractor who requires his subs to carry these policies can sleep soundly knowing that someone else’s mistake won’t cost the G.C. his whole business.

Our goal is to make sure your business is properly protected, without disrupting business operations in any way. If you have a sub-contractor who doesn’t carry insurance, or you just want to check to see if he/she does, reach out to Mighty Oak. We can help you make sure your subs are properly insured.

The Challenge of Properly Insuring a Landscape Architect

Building a Complete Policy

General Liability Insurance

Workers Compensation Insurance

Commercial Automobile Insurance