Artisan contractors, like plumbers are generally easier to insure. Most insurance companies want to insure them. Unlike General Contractors, plumbers are unlikely to find themselves having trouble finding coverage. However, there are some exclusions and conditions that are important before buying a $500 policy. Most times, contractors want the lowest possible price. They even avoid getting insurance until it is required by a general contractor or a specific project. In either case, it is important to make sure that the policy purchased covers the actual operations of the plumber.
There are some points to keep in mind when shopping for liability insurance.
When looking for a quote, contractors try to underestimate their volume of work and scope of their operations. This is because they are afraid that by disclosing too much, their premiums might rise. That is understandable. Insurance is expensive. But by the golden rule, you get what you pay for. There is no point in paying for insurance that when the time comes to make a claim, you find out there was never coverage for that specific work or project.
What information is crucial to disclose at the time of looking for coverage?
One of them is, public work operations. If there is any work being done in a school, city project, or hospital, there is a risk increase that could generate a claim. It is important to know if these operations are included or excluded in your policy. If this information is not disclosed to the agent, they will not be able to advise appropriately. Maybe you still buy the policy, even if the exclusion applies to you. But at least now you know going in, that there needs to be special care in this project to avoid any risk of a claim.
Another great detail about operations that should not be kept from the agent is the level of work that is done on new construction projects. If there is work being done on buildings or homes that are in the course of construction before any certificate of occupancy, there are carriers that will flat out not cover those operations. The agent needs to know this so they can look for a carrier that will agree to cover to the extent of your work.
What about subcontractors?
Subcontractors are a very complex matter when discussed in the insurance context. When an agent asks about subcontractors, they need to be told if the subcontractors used have their own insurance or not. If they do not have their own policies in place that means the liability of their work is completely on you and you are taking on all the risk.
Remember that insurance carriers have different ways of rating their policies, some do it by annual gross sales, others by payroll, others by both. But subcontracting out work to insured contractors is a transfer of risk and it is beneficial to the rate. But if they are not insured, then your policy covers their operation and any information not disclosed to the company could be used as a reason to deny a claim. Also always collect insurance policies from your subcontractors. This protects you in case of a claim and also at the end of the policy term when the insurance company may do an audit of your policy.
In the end
Insurance companies do not like paying out claims, so don’t give them a reason to deny yours. Even if the insurance you seek is for one project or for all of your operations, get in touch with an agent that is knowledgeable and can advise on multiple markets or insurance carriers. Find out what they offer, exclude and how they determine rates. It is their duty to help but they can only do so if the client is honest and forthcoming.