“Contractors Insurance Requirements – A Primer”

Commercial insurance for a general contractor is different than the insurance that a subcontractor needs to carry. Really?? Many owners, generals, construction managers don’t realize the importance of requiring insurance ‘apples to apples’. In this AmWins Client Advisory a manufacturing facility needs to hire a GC/CM to construct their new facility. An employee, new to insurance risk management, is given the job of ‘protecting’ the manufacturer in the construction contract. He asks that she pay strict attention to the insurance requirements to be required of the general contractor and any subcontractors. His charge to the employee is broad: protect us, but don’t make the insurance requirements so unreasonable that contractors are discouraged from bidding on the project. The employee finds a previous construction contract and reviews the insurance requirements. There is reference to “comprehensive general liability insurance” including endorsements listed as “broad form property damage,” “broad form blanket contractual liability,” “cross liability,” “XCU” and “additional named insured.” The limits are also listed as split limits – one applicable to bodily injury, and another lesser amount for property damage.  The auto insurance requirement refers to “comprehensive auto liability” and workers’ compensation insurance includes the “broad form all states endorsement.” In addition, all of the requirements are to be evidenced by a certificate of insurance that provides them 30 days advance notice of cancellation. It becomes readily apparent to the employee that these insurance requirements are extremely outdated. The insurance coverage, endorsements and limits listed are obsolete and are no longer available. The employee must start from the beginning. And now for the rest of the story…..