License Bonds
License bonds are required by law at the state, city, or county level. A contractor must have a license bond to obtain a license and can often be subject to a fine in the absence of securing such a license.
While construction industry insurance policies are similar to those found in the manufacturing, service and other industries; the construction industry is unique, since a minor miscalculation of exposure by the insurance provider could cost the contractor a significant claim due to a gap in coverage.
Quick service by an experienced risk professional is also a must, since certificates of insurance or other documents that are often needed quickly to get or keep a crew on a job. It is critical for your broker partner to be responsive in this area and has the expertise to get it done now, instead of late tomorrow. And, you need to be with a broker that doesn’t have too many clients they can adequately service,losing you in the stack, whenever you need a “rush” cert.
in addition to being certified as a Historically Underutilized Business (HUB), by Texas HUB.
And with our affiliation with Diversified Commercial Insurers, A&A has most insurance and bond companies available providing insurance and bonds to the construction industry.
GC’s and artisan contractors can expect to receive a full offering of insurance and bonds with expertise in:
Commercial General Liability (CGL)
General Liability policies are standard policies required in all construction projects. These policies provide liability protection for Bodily Injury, Property Damage, Completed Operations and several other coverage extensions. Parties covered under this type of a liability policy can be the property owner, the construction company, or a contractor. It is important to note that General Liability coverage does not insure faulty workmanship, but it will cover any Bodily Injury or Property Damage as a result of the faulty work, of course subject to policy exclusions and other terms.
Commercial Auto
Commercial Auto Liability coverage is almost always required of contractors when they will be entering a jobsite with their vehicles. Requiring this coverage of any and all parties coming onto a jobsite in a vehicle assures an owner or project manager that if an auto accident occurs, the negligent party has the proper coverage to respond to auto liability claims. While physical damage to owned vehicles is optional on a Commercial Auto policy, it is not necessary for compliance to contracts for this coverage to be in place, since it is for the protection of the owner of the vehicle. It is important for the buyer to have a good understanding of Uninsured Motorists coverages, as well as other coverage extensions, since these other coverages can be a factor of having insurance for a very large claim or not.
Umbrella & Excess Liability
Umbrella Liability, or as it is also called, Excess Liability, provides coverage above a primary/basic General Liability policy. Most standard General Liability polices provide $1 million in basic General Liability while Umbrella or Excess policies can provide two, five, ten, or many more millions in excess coverage. This coverage only comes into effect when the primary liability limit is exhausted.In addition to providing excess coverage for General Liability, it can also provide excess Auto Liability and Employer’s Liability coverage as well.
Workers’ Compensation
Section A of Workers’ Compensation policies protect the employer/business and the employee from claims coming from work related injuries or illnesses. Under section A of a Workers’ Compensation policy, the injured employee’s medical bills are paid for work injuries, in addition to lost wages. By securing a Workers’ Compensation policy, employers receive protection against lawsuits coming from their employees. Workers’ Compensation schedules of medical benefits and wages are dictated by the state, in which the employee was injured, hired or lived during the time the injury occurred. It is also important to understand that Workers’ Compensation is controlled by each state.
Many employers in Texas reject Workers’ Compensation coverage, opting for Texas Non-Subscribers “accident” and Employer’s Liability coverage, however, this route usually does not work in the construction world, since virtually all construction contracts in Texas require Workers’ Compensation instead of the Non-Subscription coverage.
Section B is Employer’s Liability. Employer liability provides protection for the employer from the employer’s gross negligence. The only time this comes into play is in case of litigation from a survivor of a deceased employee.
Contractors Pollution Liability (CPL)
Contractors Pollution coverage protects contractors from claims or lawsuits for Bodily Injury, Property Damage and clean-ups, as a result of pollution conditions originating from work done by the contractors. These policies can be tailored to provide both onsite and offsite coverage, in addition to extending coverage to commercial auto exposures.
Contractor’s Professional Liability
This coverage is also often referred to as Contractors Errors and Omissions.This form of professional liability insurance covers lawsuits over mistakes made by the contractor and their employees. It provides defense coverage when the contractor’s client presents a claim for a financial loss due to the contractor’s professional negligence. An example would be in the event a client sues for poor quality or incomplete work. This policy also reimburses for defense expenses and judgments against the contractor. This coverage is essential for contractors that both design and build structures.
Contractor’s Equipment
A contractor’s tools on or off the jobsite is always subject to theft or loss by other perils.
The best way to describe this type of a policy is to state that coverage is not for property that is stationary, but moves with the contractor, such as construction tools and equipment that move from one jobsite to another.
Builder’s Risk Insurance for Contractors
Builder’s risk insurance is in the inland marine family of coverages that provides coverage for structures under construction, including onsite materials and those in transit. Coverage can also be extended to provide protection for materials stored offsite at other locations and Delay in Startup. Since these policies are written for individual projects, they can be written for the term of the project, which can be for several months, up to several years. Coverage is generally written on an All Risks type basis and can include extensions for Flood and Earthquake as well.
For larger contractors that have multiple projects at different locations, it is possible for the Builder’s Risk policy to be written on a continuous, reporting basis. This allows the contractor to streamline the process of having all of their projects under one policy, making it much easier from an administrative standpoint.
Builder’s risk policies can be written in the name of the contactor, project owner or the project developer. All three parties have an insurable interest, so it should be decided early on in the process, as to which party secures this coverage.
Surety Bonds for Contractors
Surety bonds serve as a guarantee that a contractor will complete their project as presented in a contract. In the event a contractor fails to satisfy the contractual requirements laid out in the contract, the surety company reimburses the contractor’s client. Typically, the surety company expects repayment for claims, and almost always requires some form of collateral.
The four types of standard surety bonds contractors usually need are:
Bid bonds
Bid bonds keep contractors from submitting unrealistic bids. A guaranteed compensation amount is paid to the project owner if the contractor fails to honor their proposal. Only certain projects require bid bonds.
Payment bonds
Payment bonds guarantee payments to the contractor’ssubcontractors and suppliers, while providing protection to the project owners from needing to pay these costs. Federal laws require contractors to secure payment bonds prior to being awarded a contract exceeding $100,000.
Performance bonds
Performance bonds guarantees to the project owner that the project will be completed as agreed upon in the contract. If the project is not completed within the agreed upon time, or if the contractor fails to satisfy quality standards, the project owner can call on the performance bond to pay a claim.