Exclusions: The Dark Side of Insurance.

The Scenario:

Like so many others, you are a new contractor. Insurance coverage exclusions are the last thing on your mind. After completing your contractor pre-licensing course, you need to get insurance and decide to look online. Like most purchases, you are looking for the best price, and want to get this over with as quickly as possible. You head to Google and start researching, and quickly find some options and buy a policy. You’re feeling great because you’re done with this task and you got a great price!

Now let’s take a look into the future. A few years have passed now, and business is booming. You are one of the best builders in your state and feel like you are on top of the world. Things are running smoothly but then you get a complaint against you. You file a claim with your insurance company, and it gets denied! Distraught and frustrated, you start asking yourself, “What went wrong?”

The Coverage Omissions Problem:

Like most policies purchased online, the insurance you bought was full of harmful coverage exclusions. You may wonder what a coverage exclusion is. An insurance coverage exclusion is a provision in an insurance policy that negates coverage. In other words, if you have this in your policy, and you perform the type of work listed in the exclusion, you have zero insurance coverage for that loss.

This is crazy! It essentially means that you are throwing away money every month paying for an insurance policy that isn’t covering you for what you thought it would. Not only are you wasting money, but you are opening yourself up to potential breach of contract issues as well as having to pay for these losses out of pocket. At this point you may be asking yourself, “What type of exclusions are out there, and how do I know if I have them?”

Insurance Exclusions:

There are multiple types of coverage exclusions. The most common ones seen in policies are Soil Subsidence, Bodily Injury to Subcontractor’s Limitation, and Prior work exclusion. But there are many others like the Contractual Liability Limitation CG 21 39, Independent contractor’s limitation, and Damage to work performed by subcontractors including CG 22 94. For instance, one roofing contractor sent us a copy of their policy, and he had a 100% roofing exclusion! Most states require you to be covered for your scope of work, and if you were this roofer, you could be facing not only legal trouble but also a problem with your contractor’s license.

For obvious reasons, it’s hard to trust an insurance agent who sold you a crappy policy. And the sad reality is that most insurance agents don’t fully understand what they are selling. They don’t take the time to read through the entire policy that is being sold, which usually results in trouble later down the line for you. To combat this, we have partnered with Summit Risk Management and Insurance. With over 20 years of experience in the insurance industry, they are a trusted source for getting insurance that doesn’t have harmful coverage exclusions. Unlike other companies, they take the time needed to make sure that you don’t have “Fake Insurance.”

The Review Process:

The concept that time is money, is very applicable in this instance. For this reason, Summit’s review process is very quick and simple. Simply fill out this quick questionnaire which contains a link to upload a full electronic copy of your current insurance policy. The information from the questionnaire will help the Summit Risk Advisor look for job-specific exclusions. Once found, the Risk Advisor will then provide you better options. It’s that simple!

Closing Comments:

In conclusion, we hope that you found this article informative. At 123 Contractor Education, we are in the education business. With humble beginnings, starting in Utah and Oregon, we continue to spread across the country. Moreover, we strive to bring you the most up-to-date information that will help you better your business. Furthermore, we succeed when you succeed.

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