Professional Liability Insurance Attorney
Liability insurance is a non-negotiable for any Pennsylvania business. Having a policy isn’t enough. It’s important to review your certificate of liability insurance, understand the specifics, and know that your coverage protects you from unanticipated claims. It is equally as important to be sure you are protected under your subcontractors insurance policy. Strong business liability insurance in PA is your financial protection against bodily injury, property damage, a professional error or claims from home owners and insurance companies filing subrogation suits against you.
It’s important to recognize that the legal complexities found in liability insurance are misleading, often by design, and are frequently overlooked. Steve Snyder helps businesses by reviewing their policies and finding areas of concern and risk aversion. Steve will help you understand your current contractor’s insurance and your subcontractors insurance coverage, review relevant documentation, including your subcontractors contract and insurance, and explain how to use your coverage
Risks of Overlooking Your Liability Insurance Documentation and the liability insurance documents of your subcontractors.
Liability insurance is a protective shield for contractors, builders, and any commercial construction business. However, without the discerning eye of an experienced liability insurance lawyer, what appears to be complete coverage can hide invisible gaps. Simply holding a certificate of liability insurance doesn’t guarantee protection, and misunderstanding your policy can lead to devastating financial consequences when a claim arises.
What is a Certificate of Liability Insurance (COI), and why is it so important in PA construction?
A certificate of liability insurance (COI) proves that your business or subcontractors have valid liability insurance. COIs are essential for complying with contractual requirements and managing risk when hiring subcontractors. Verifying the accuracy and adequacy of a COI ensures all parties are appropriately covered on a project.
As a contractor, it is critical to make sure you are covered, not just under your insurance policy but also under your subcontractors insurance policy. And a mistake in this area can be very costly. Here is a true story to illustrate why:
I represent a lot of builders and remodelers and they all know that when they are hiring a subcontractor, they need the subcontractor to provide them with a “Certificate of Liability Insurance.” What they often do not know, and the insurance company does, is that the insurance certificate you were provided probably will not protect your company in the event you need to make a claim. Insurance companies do it all the time, and they do it on purpose. I will tell you that nearly every time I ask a client to show me a copy of an insurance certificate they received from a subcontractor’s insurance company, they are not properly filled out and the contractor is left completely unprotected. And if you don’t know what to look for, you could have a serious, and very costly problem in the event you need to make a claim…with your subcontractor’s insurance company and with your insurance company as well!
Real Life Example
A client of mine in the roofing business had it happen to him and it has cost him tens of thousands in attorney fees and potential liability of close to $200,000.00 to pay for a mishap on the job site that should have been covered by his subcontractor’s insurance company.
The roofing company, we will call them ABC Roofing, signed a contract to put a new roof on a large old apartment building. ABC then contracted with a subcontractor to do the roof. ABC required the subcontractor to provide a Certificate of Liability Insurance, which they did, with ABC Roofing printed right on the bottom of the certificate under the heading “Certificate Holder.” My client believed he was covered.
Neither contractor was aware that the roof on the building had leaked for years and the substructure was in bad shape. On the first day of work by the subcontractor, a section of the roof collapsed. Luckily, no one was injured or killed.
The owner of the building made a claim to his insurance company for nearly $200,000 to put a new roof on the building. Two years later, the Owner’s insurance company filed a suit against ABC Roofing to recover the money they paid to the Owner. Its what the insurance industry calls “subrogation.” They also named the Subcontractor in the suit but he was no longer in business.
ABC figured this would not be a problem because he had obtained a Certificate of Liability Insurance from the Subcontractor. However the Subcontractor’s insurance company declined the claim. The reason for their denial? The Certificate of Liability Insurance provided by the Subcontractor’s insurance company named ABC Roofing as a “CERTIFICATE HOLDER.” What the Certificate did not do was name ABC Roofing as an “ADDITIONAL INSURED.” Insurance companies do this all the time, hoping the contractor is unaware of the difference between a “certificate holder” and an “additional insured.” And often the contractor is not aware of the difference.
So, after being denied coverage by the subcontractor’s insurer, ABC went to his own insurance company, who he had been paying insurance premiums to, for years. And guess what his insurance company told him? That’s right! They denied the claim because ABC was supposed to be covered by the Subcontractor’s insurance company. My client is now involved in a costly lawsuit for which the subcontractor’s insurance company should have paid the claim.
the bottom line
You must have a written Subcontractor’s Agreement and a Certificate of Liability Insurance for every subcontractor you hire and it is important that the Subcontractor’s Agreement and the Certificate of Liability Insurance have specific language to protect the contractor.
If you want to know how the story ends, give me a call. But more importantly, if you have not talked to a lawyer who specializes in construction law about your contracts and subcontracts, give me a call. I will be pleased to review all of your contracts and make sure you are protected.
Don’t wait until you have a serious legal problem to call!