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5 FACTORS THAT AFFECT YOUR CONTRACTOR INSURANCE PREMIUM
- General contractor insurance
- February 16, 2023
Your insurance premiums are primarily affected by factors in two categories: Company specific and Industry specific.
Company specific factors are based on your individual business information to include your company’s physical location, your total years of experience in the specific industry, claims history over the past five years, the specific scope of work that your company performs, and many more.
Industry specific factors are calculated based on industry-wide claims history for factors such as claims history within a specific zip code or claims history for an entire business type.
There are several factors that may reduce or keep your insurance premiums lower. Some of these factors include:
Many contractors understand that they should have a signed contract between themselves and their customers, however, a contract that is frequently overlooked is the contract between the general contractor and their subcontractor(s). This is called a subcontract agreement and should be in force for every project that a subcontractor works on. The agreement details the insurance coverage the general contractor requires the subcontractor to carry while working for them, which is equal to or higher than the general contractor’s insurance limits. The subcontract agreement also includes “hold harmless” verbiage that releases liability of the general contractor from any claims that arise from the subcontractors work. Without these contracts in place, general contractors can be held accountable for claims from a subcontractor’s work and those claims would be reflected on the general contractor’s loss history. The claim, although not specifically caused by the general contractor’s work, will increase the general contractor’s premiums for the following five years.
General contractors should also be obtaining certificates of insurance from each of their subcontractors showing that the subcontractor has active General Liability and Workers Compensation coverage, at the very minimum. The general contractor should also be listed as an “additional insured” on the certificate of insurance which will allow the general contractor to file a claim with the subcontractor’s insurance carrier directly.
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