4 Huge Mistakes Contractors Make When Getting Contractors Insurance

Contractors Insurance MistakesWe get calls from contractors every month that are extremely frustrated with their current contractors insurance provider because of a mistake the contractor made when getting insurance. They have to cancel the current policy they have, and obtain new coverage that meets the needs of the job they are bidding on. Now, not all of the 4 mistakes below are because of smoke and mirror tactics from insurance providers, though some of them are. A lot of the time contractors themselves don’t provide all of the information needed.

  1. Purchasing coverage just because it’s the cheapest

  2. What happens, more often than not, it doesn’t meet job requirements. Often times the requirements for specific jobs contracted call for a certain endorsement or an A rating. You will more than likely have to cancel your current policy and obtain new coverage to meet the requirements for the job. You will also lose out on all of the money spent on the policy that you couldn’t even use. In the long run, buying the cheapest insurance will cost you more. Cheaper policies also tend to not cover certain needs.

  3. Shopping with more than one broker

  4. Many contractors do not understand that the first agent to submit an app to an insurance company is the agent that receives the quote. Submitting more than one app to an insurance company can have negative effects on the quote. It’s best to find a trustworthy, hardworking agent that allow them to shop with all of the Insurance carriers for you, they are professionals.

  5. Not being honest when providing company payroll/receipts/operations

  6. Insurance companies do audits. If you do not provide all real figures from the get go, it will blow up in a contractors face in the future. In the event that an insurance company does an audit and finds false numbers, the insurance company will do any of the following; will bill you for the additional audit premium from the year in relation to the audit, cancel your renewal policy, or send you to collections if you are unwilling to pay the difference in back premiums.
    If you are honest with your broker at the beginning, the broker can get you discounts, or find a better program for you, even if your payroll/receipts are higher than the minimum premium.

  7. Not understanding the policy they will purchase(exclusions, limitations)

  8. A lot of the time contractors will rely on brand names or price to make there purchasing decision. Understanding the form is… an ISO Form is a preferable form of insurance policy compared to a manuscript form. An ISO Form generally adheres to the insurance industry standard, whereas a manuscript form is “manually scripted” by that particular insurance carrier. What that leads for room for is potential insurance qualifications and standards that cannot be met if and when a contractor is attempting to satisfy insurance requirements to insure a job. Simply put, make sure your broker fully understands what your intentions are for your insurance form to properly fit your insurance needs.

How do you avoid these 4 mistakes? Work with an insurance broker! The more info you can give an insurance broker, the better results they can give you. The broker works for you, so let them work for you. WE don’t work for the insurance company, we work for our contractors.