Risk Management For Contractors

Covering Your Assetswith

Practical Risk Transfer

www.smginsurance.com

Dawn Pogue, CIC, CRISSMG Insurance

http://www.smginsurance.com/

Your Panel Moderator

Dawn Pogue, CIC, CRIS

SMG Insurance


Rocco Sinisgalli,Oneida Builders, Inc.


Jesse Morado, CR, CAPSThe Renovation Coach, Inc



Carol Kimball, Claims ManagerSMG Insurance

What We Want To Accomplish

Insurance Risk Transfer

YOUR ASSETS


General Liability


• Bodily Injury• Property DamageWhat It Covers

• Remodeler: Per $1,000 of total cost• Distributors: Gross Receipts basisPremium Basis

Case Study:General Liability

The UncooperativeHomeowner


Risk Management

Negligent Entrustment


Hold Harmless Agreements


Purpose

• Indemnification• Liability to a 3rd Party• Back up indemnity with insurance

Additional Insured Status


Purpose

• This gives you Direct access to both• Defense of claims• Coverage for insured losses

Right To Cure


Purpose

• Requires homebuyers to notify builders of alleged construction defects.

• Must notify prior to a lawsuit• Provides a timeframe for addressing the issues.• MUST be in your contract

Implementation


INSURANCE REQUIREMENTS FOR SUBCONTRACTORS We must ask that before you begin work that you satisfy the following:

Please execute the Master Service agreement and return it to our office.

Please furnish us with a copy of your insurance certificate.

INSURANCE COVERAGE LIMITS Worker’s Compensation Each Accident $ 100,000 Employers Liability Disease – policy limit $ 500,000 Disease – each employee $ 100,000 General Liability General Aggregate $1,000,000 Products-Com/Ops Aggregate $1,000,000 Personal & Advertising Injury $ 500,000 Each Occurrence $ 500,000 Fire Damage $ 50,000 Medical Payments $ 5,000 Automobile Liability Combined Single Limit $1,000,000

The insurance certificate must include the following: 1. ABC CONSTRUCTION is Named as an additional Insured on the certificate under General Liability policies. 2. Insurance carrier must be A.M. Best Rated (A-) or better. PLEASE REMEMBER THAT VALID COVERAGE IS REQUIRED BEFORE ANY PROJECTS STARTS.

Sample Certificate


ACORD TM CERTIFICATE OF LIABILITY INSURANCE Date (MM/DD/YY

Producer Phone Name and Address of Contractor’s Insurance Agent

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.

INSURERS AFFORDING COVERAGE

INSURED: Name and Address of Contractor as shown on contract with Certificate Holder

INSURER A: NAME OF INSURANCE COMPANY INSURER B: INSURER C: INSURER D: INSURER E:

COVERAGES THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.

INSR LTR TYPE OF INSURANCE POLICY NUMBER

POLICY EFFECTIVE DATE (MM/DD/YY)

POLICY EXPIRATION DATE (MM/DD/YY) LIMITS

A

GENERAL LIABILITY COMMERCIAL GENERAL LIABILITY

CLAIMS MADE OCCUR

______________________ ______________________ GEN’L AGGREGATE LIMIT APPLIES PER:

POLICY PROJECT LOC

POLICY NUMBER EFFECTIVE DATE EXPIRATION DATE

EACH OCCURRENCE

FIRE DAMAGE (ANY ONE FIRE)

MED EXP (ANY ONE PERSON)

PERSONAL &ADV INJURY

GENERAL AGGREGATE

PRODUCTS – COMP/OP AGG

$ 500,000

$ 50,000

$ 5,000

$ 500,000

$1,000,000

$1,000,000

A

AUTOMOBILE LIABILITY ANY AUTO ALL OWNED AUTOS SCHEDULED AUTOS HIRED AUTOS NON-OWNED AUTOS ____________________ ____________________

COMBINED SINGLE LIMIT (EACH ACCIDENT)

BODILY INJURY (PER PERSON)

BODILY INJURY (PER ACCIDENT)

PROPERTY DAMAGE (PER ACCIDENT)

$ 500,000

$

$

$

GARAGE LIABILITY ANY AUTO __________________

$

$

$

A

EXCESS LIABILITY OCCUR CLAIMS MADE

DEDUCTIBLE RETENTION $

EACH OCCURRENCE

AGGREGATE

$

$

$

$

$

A

EMPLOYERS LIABILITY POLICY NUMBER EFFECTIVE DATE EXPIRATION DATE

WC STATU OTHER TORY LIMITS

E.L. EACH ACCIDENT

E.L. DISEASE-EA EMPLOYEE

E.L. DISEASE-POLICY LIMIT

$ 100,000

$ 100,000

$ 500,000

OTHER

DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/EXCLUSIONS ADDED BY ENDORSEMENT/SPECIAL PROVISION

ABC CONSTRUCTION is an additional insured as defined by the policy as respects General Liability.

CERTIFICATE HOLDER ADDITIONAL INSURED; INSURER LETTER _____ CANCELLATION

SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE MISSING COMPANY WILL ENDEAVER TO MAIL

30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE COMPANY, ITS AGENTS OR REPRESENTATIVES.

AUTHORIZED REPRESENTATIVE

SIGNATURE OF CONTRACTORS AGENT

ACORD 25-S (7/97) ACORD CORPORATION 1988

Master Service AgreementTerms and Conditions


Master Service Agreement Insurance Requirements $ 500,000 This Master Service Agreement is entered into this ______ day of ____________, _____ by and between Contractor and ______________________ Service Provider on the following terms and conditions. 1. Contractor wishes to utilize the services of Service Provider to provide services to Contractor. Based

upon the nature of the services provided by Service Provider, it is anticipated that it will be impractical to enter into a separate agreement for services each time Contractor desires to use Service Provider.

2. Contractor requires that Service Provider meet certain terms and conditions before

Contractor uses Service Provider’s services. These terms and conditions are set forth in this agreement.

3. In order to expedite the use of Service Provider’s services each time they are needed, the parties agree to

enter into and comply with this Master Service Agreement prior to any actual services being performed. It is the intent of the parties that these terms and conditions apply to any provision of services by Service Provider regardless of whether these terms and conditions are referenced in any purchase order, subsequent contract memo, etc. during the term of this contract.


8. INDEMNIFICATIONS AND INSURANCE 8.1. The Work performed by the Service Provider shall be at the risk of the Service Provider

exclusively. To the fullest extent permitted by law, Service Provider shall indemnify, defend (at Service Provider’s sole expense) and hold harmless Contractor, the Owner (if different from Contractor), affiliated companies of Contractor, their partners, joint ventures, representatives, members, designees, officers, directors, shareholders, employees, agents, successors, and assigns (“Indemnified Parties”), from and against any and all claims for bodily injury or death, damage to property, demands, damages, actions, causes of action, suits, losses, judgments, obligations and any liabilities, costs and expenses (including but not limited to investigative and repair costs, attorneys’ fees and costs, and consultants’ fees and costs) (“Claims”) which arise or are in any way connected with the Work performed, Materials furnished, or Services provided under this Agreement by Service Provider or its agents. These indemnity and defense obligations shall apply to any acts or omissions, negligent or willful misconduct of Service Provider, its employees or agents, whether active or passive. Said indemnity and defense obligations shall further apply, whether or not said claims arise out of the concurrent act, omission, or negligence of the Indemnified Parties, whether active or passive. Service Provider shall not be obligated to indemnify and defend Contractor or Owner for claims found to be due to the sole negligence or willful misconduct of Indemnified Parties.

Service Provider’s indemnification and defense obligations hereunder shall extend to Claims occurring after this Agreement is

terminated as well as while it is in force, and shall continue until it is finally adjudicated that any and all actions against the Indemnified Parties for such matters which are indemnified hereunder are fully and finally barred by applicable Laws.

Service Provider agrees to waive any and all tort or other subrogation rights for property damage or bodily injury against the contractor

arising directly or indirectly out of, relating to, or in connection with the performance of services.

8.2. Upon execution of this Master Service Agreement, and prior to Service Provider’s commencing (in the broadest possible sense of the word) any work or services, the Service Provider shall carry general liability insurance and the Service Provider shall provide Contractor with a Certificate of Insurance naming Contractor as an additional insured hereunder. The coverage available to Contractor as an additional insured, shall not be less than $500,000 combined single limit per occurrence and a $1,000,000 general aggregate providing coverage for completed operations, products liability, and contractual liability. The Service Provider’s insurance carriers must be “A-” rated or better. Service Provider shall also carry and

provide proof of workers’ compensation.

Master Service AgreementIndemnity Provision


9. WARRANTY AND REPRESENTATIONS

The Service Provider represents and warrants that all materials, labor and/or systems furnished by the Service Provider in connection

with the construction of all homes built by the Contractor shall be free of defect for a period of one year for workmanship and systems for two years.

If a defect of material or workmanship occurs within the one-year period or systems for two year, the Contractor will notify the Service

Provider of such defect and upon receipt of such notice, the Service Provider shall immediately at its expense act to satisfactorily repair and/or replace the defective material and/or workmanship and/or systems. The Service Provider will to the extent called upon by the Contractor participate in, at the Service Providers own expense the conciliation and arbitration mechanisms established under any home owners warranty program of the Contractor as such conciliations and arbitration related to materials and/or labor furnished by the Service Provider.

SAFETY STANDARDS Service Provider agrees that the Service Provider and all employees of the Service Provider are required to fully comply with and

implement all government laws (OSHA) pertaining to safety standards. Service Provider agrees that any fines, assessments or penalties imposed upon the Contractor by failure of the Service Provider or his employees to comply with the government standards will be fully charged back and paid for by the Service Provider.

11. CANCELLATION Contractor reserves the right to cancel this Master Service Agreement in whole or in part if Service Provider breaches this contract by

failing to provide necessary services in a timely and workmanlike manner and does not correct such failure within ten days of receiving written notice from Contractor specifying such failure or if Service Provider in any other respect repudiates or otherwise breaches the terms hereof, including the warranties of Service Provider.

Master Service AgreementWarranty and Representations

Right To Cure Language

Georgia law contains important requirements you must follow before you may file a lawsuit or other action for defective construction against the contractor who constructed, improved or repaired your home. Ninety days before you file your lawsuit or other action, you must serve the contractor a written notice of any construction conditions you allege are defective. Under the law, a contractor has the opportunity to make an offer to repair or pay for the defects or both. You are not obligated to accept any offer made by a contractor. These are strict deadlines and procedures under state law, and failure to follow them may affect your ability to file a lawsuit or other action.


Workers Compensation


• Injury or Illness• Employees or Subcontractors• Course of employment

What It Covers

• Per $100 of payroll• Rate Based On Job Classification

Premium Calculation

Case Study:Workers Compensation

The Sub Of A Sub


Work Comp Inquiry:

When is Worker’s Compensation

considered primary?


Work Comp Inquiry:

Certificates of Insurance

www.georgia.gov


http://www.georgia.gov/

Builders Risk


• Insurable Interest• Materials and fixturesWhat It Covers

• Per $100 of estimated complete valuePremium Basis

Job Cost Allocation

It’s Simple Math


Cost Of Insurance


General Liability $97,934Package Policy $11,168Workers Compensation $33,061

Total Estimated Cost $142,163

Total Estimated Cost Per Home $558

Insurance Cost 0.30% of Gross Receipts

ABC CONTRACTORS

Cost Of Insurance

255 homes @ an Average Sales Price Of $183,000$46,600,000

Panel Discussion

How To Implement


Final Thoughts

Statute Of Repose

Similar to statute of limitationTrigger is the completion of an act

"Substantially completed“

Georgia Statute of Repose: 8 years


Questions & Answers


Your Panel

Dawn Pogue, CIC, CRISSMG Insurance

Rocco Sinisgalli, Oneida Builders, Inc.

Jesse Morado, CR, CAPSThe Renovation Coach, Inc.

Carol Kimball, Claims ManagerSMG Insurance


Thank you………….

Dawn Pogue, CIC, [email protected]

Direct line: 678-533-2206Mobile: 404-391-8293


mailto:[email protected]

Risk Management For Contractors

Documents

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