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WHAT TO DO IF YOU HAVE A ROOFERS LIABILITY INSURANCE CLAIM: A BLOG ABOUT ROOFERS LIABILITY CLAIMS
- Roofing contractor insurance
- November 23, 2022
Roofing Contractors are by nature a group that carry a higher-than-average level of risk for accidental loss. It can’t be avoided – contractors are present on the job with heavy tools and equipment and actively work on buildings under construction or in the process of a remodel or tenant improvements. They’re hooking up (or are working near) electrical currents and piping, which can easily cause fires or floods in the event of an accident. They climb on buildings and other people’s personal property. Let’s face it – the risk for accidental third-party bodily injury or property damage goes up exponentially when construction takes place, even when contractors take care to use caution and follow safety protocols while on the job.
Among the contractor classes, insurance companies rank roofing contractors near the top in terms of risk, simply because of the nature of the work performed and the number of Roofing professional Liability Policy Claims the roofing contractors encounter in a given year. Insurance companies therefore price Roofer’s Liability accordingly. For this reason, general liability insurance for roofing professionals tends to be more costly. However, this critical coverage cannot be overlooked if you are a roofing contractor.
That can be summed up in two words: RISK TRANSFER. Risk is unavoidable, but some risk – such as the business-ending catastrophic kind, can largely be insured against by purchasing Roofing Professional Liability Insurance. You pay a premium, and in exchange the insurance company agrees to take on risks you are unable to handle yourself.
If a lawsuit is filed against you for injuries or damages you’ve unintentionally caused to third parties, or someone claims damage or injury from your workmanship, a roofing contractor insurance policy is intended pay claims to third parties as long as the claim is a covered peril. For this reason, you are not looking for the cheapest roofing insurance – you’re looking for insurance that properly protects you against the perils you are most likely to encounter as a roofing contractor.
Let’s start with an example of a claim that happened when our agency was in its infancy. We used this example for all agents because it perfectly highlighted the need for all contractors to carry general liability insurance. There was a house in the process of having a kitchen and bath remodel completed. As you’d expect, multiple trades were coming in and out and working alongside other trades as they were all coordinated by the general contractor to get the job done on time and on budget.
The carpentry contractor was given a change order to add some additional cabinets in a bathroom. Most of the other trades had already finished up, including the plumbers, electricians and drywallers. Should be simple to get some cabinets installed along the wall, right? Well, as the cabinets went in –unbeknownst to the carpenter – one of his nails pierced a pipe behind the wall he wasn’t aware was there – but nothing happened. No leak, no sign that anything was wrong. The nail sat perfectly embedded in that pipe for over 3 years before finally rusting out, causing a subsequent $75,000 water damage claim.
No one knew which contractor was at fault until an exhaustive search finally determined the cause of loss. Before that had happened, the general contractor, the electrician, the plumber, and the carpenter were all pulled into the claim and subsequent lawsuit. Each carried a general liability policy which paid for their defense costs while the party at fault was eventually determined. When it was found that the carpenter was ultimately responsible, their policy provided coverage for the financial damage done to the homeowner. because commercial general liability doesn’t just cover you for accidents that can occur when you’re on the job. It also covers you for up to 10 years after the job is complete – this is known as ‘tail’ coverage.
You can do everything right as a contractor and still get pulled into claims. It’s inevitable. And in the case of the accident on the part of the carpenter, the $75,000 was paid in addition to the $40,000 in legal costs required to defend the case in court. Can you afford a $115,000 out of pocket loss? Not many can. That’s why contractors need to transfer risk to an insurance carrier for a determined price.
As we stated before, general liability insurance covers you for bodily injury or property damage to third parties. It also provides defense in the event you are sued for either of these issues, or if someone claims they have been harmed bodily or financially from a problem with your completed product or workmanship. If you have completed a roofing job for a client and they are happy with your work, you may not hear anything from them and believe the job to be completely over and done with.
But the thing about roofing – and all construction for that matter – is that problems may not appear right away. Issues may crop up years down the road when a storm strikes, for example, revealing a defect in how the roof was installed only once significant water damage has occurred.
The answer is typically yes, assuming you purchase a standard occurrence liability policy at the time that the work took place. General liability insurance written on an occurrence form allows workmanship claims to be filed not only during the year you are insured, but up to an additional 9 years after on your completed product – for a total coverage period of 10 years. This also includes the cost to defend you in court if you are sued, minus any deductible the policy came with.
A study done by The Hartford found that 40% of small business owners will have to file a claim within 10 years. This claim could be for property damage or liability.
Of course not. You might argue, and in many cases rightfully so, that some factor other than your workmanship ended up causing damage. What about any natural disaster – high winds, hail, storms, and the natural process of roofing materials aging? How can you prove that the issue isn’t from your work? Won’t the client’s homeowners insurance cover roof damage if you’re not responsible?
If a homeowner files a lawsuit against you, your insurance carrier will have a duty to defend you at their expense to determine where the actual fault lies. If it was determined that you did not contribute to the damage, the homeowner may need to approach their homeowner’s insurance policy to determine if there is coverage there for the water damage they suffered. However, the liability policy will already have been worth having in place since the costs to investigate and defend (if there is a lawsuit) will have been covered by your Roofing Contractor Insurance Policy. While it’s true that you should try to address the claimant’s concerns before the matter ever becomes a lawsuit or claim, that may not always be possible. An insurance adjuster may need to initiate an investigation to determine who, if anyone, is responsible for damages.
However, if your workmanship is proven to be the cause of loss, you will likely be held responsible for the leak. In addition to defense and investigative costs, the insurance company may need to pay out a large sum for the actual damages.
If your employee is injured in the line of roofing, that claim needs to be filed with your workers compensation insurance policy. But what if a homeowner or passerby is injured as I’m installing a roof? Does liability insurance cover that? The answer is yes, third party bodily injury is a covered peril in roofers liability insurance policies.
If you are working up on a roof and drop materials and accidentally injure a third party, for example, your roofing contractor insurance policy is meant to be there to handle any lawsuit or expenses stemming from that injury. If you are working with a torch and leave hot roofing materials which cause a fire and injure a homeowner or a business owner, this coverage is critically important to have in place. This is because preliminary injuries may not be all that occur as a result of the bodily injury. There may be a lawsuit filed against you over lost wages, medical bills, and even personal injury as a result. Your general liability policy is mean to be there to defend you in the event of a lawsuit, as well as cover injuries or damages that result to third parties in the course of your work.
Call our office and our dedicated staff will help to determine exactly how the claims process needs to be initiated. We may be able to discuss the pros and cons of filing. For a small issue of dissatisfaction or minimal property damage, you may be able to afford to handle such issues out of own pocket directly with your client. But for the larger issues it would be best to file a roofing insurance claim to determine if your insurance covers the issue in question.
As agents specializing in contractor insurance, we’ve encountered many types of roof damage claims and can guide you accordingly. One example would be of a roofer who, while in the process of re-roofing a building accidentally broke an existing sprinkler system and caused a major leak. People were displaced from their home, their personal items were destroyed, and water damaged most of the structure. While this was clearly not intentional, the damage was extensive and a lawsuit followed, and the liability policy footed the bill.
Your inaction can also put you on the hook financially – an example of that a roofer left roof exposed , and a storm comes along that causes major property damage. This peril is often excluded completely from roofers’ liability policies, simply because the number of claims that result from roofs being left open (or improperly covered) exceed the roofing insurance company’s ability to pay out on such claims and still remain in business.
General liability for roofers may not be required by law, but it is a critically important component in protecting your business. Without liability insurance, large scale catastrophic losses due to property damage, bodily injury, medical expenses or workmanship claims must be paid out of your pocket. If you are not incorporated, these large claims could even result in the loss of your personal property to pay for damages awarded by a court.
At Contractor Solutions Insurance Agency, Inc., we’ve developed close relationships with many of our insurance companies over the years, allowing us to negotiate better pricing on general liability insurance for roofers. We prioritize coverage over pricing, meaning we will get you the best coverage for the best pricing available. We will not sell our clients the cheapest roofing insurance policy that provides no coverage. All of our staff have over 10+ years of experience in this field.
Additional Questions, Concerns, or Urgent Requests? Give us a call at (619) 741-5118 and speak with a representative today. You may read more about our company and our founder Renee here.
Please note: none of the claim examples or descriptions of policies used in this blog provide a guarantee of coverage.
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