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Contractors General Liability Insurance
There are two major types of General Liability policies: "Occurrence" form and "Claims made" form. The vast majority of General Liability policies for the contruction industry are written on an "Occurrence Form" basis. Most "Professional Liability" policies are written on "Claims Made" form.
Refer to the glossary for definition and the differences between these two forms of coverage.
The main parts of the general Liability policy are:
*Each Occurrence Limit
*General Liability Aggregate Limit
*Products and completed operations (Products Liability) Aggregate Limit
*Fire Damage (Tenant's Fire Legal Liability)
*Medical Payments (No Fault Medical)
*Personal and Advertising Inquiry
Public and Private owners first began to use OCIPs on large-scale projects. On smaller projects, the additional administrative cost generally made it less worthwhile to use OCIPs.
However, recently owners and developers have begun to use OCIPs for construction of condominium and other multi-residential projects of much smaller scales. "Construction Defect Claims" by homeowner associations have plaqued such projects for decades and have made it extremely difficult to insure such construction. Many contractors and subcontractors are unable to insure these projects at almost any price, unless they enroll in an OCIP. It may be the only way such a project can be constructed in today's insurance market.
For complete information on these types of policies and to obtain a formal quote, please call our office at 1-800-723-5003.
Course of Construction Property Insurance or "Builders Risk" policy basically pays the insured for the damages that occur during the policy period to the structure that is being built by the contractor (due to such perils as fire, wind vandalism, etc.). Builders Risk could be for "new construction" (ground up) or for remodeling construction (including Tenant improvements, conversions, etc). This policy should not be mistaken with a General Liability policy, which pays a third party for bodily injury or property damage as a result of the insured's negligence. If a construction project is financed, the lender will always ask for this policy to protect its collateral (the building). In addition to covering the building, the Builders Risk policy can also be tailored to cover such soft costs as the loan interest, insurance premiums, Rental income, plans and permits, Architectural and design fees, etc.
Professional Liability, also known as "Errors & Omissions" or "Malpractice" is purchased by "Design & Build" contractors or other professionals, such as architects, engineers and surveyors. This coverage pays for claims arising out of the negligence, errors or omissions by the professional, related to his/her professional services and advice. The claims could be for bodily injury, property damage, economic losses, consequential damages and legal fees and expenses. It is important to remember that with most professional liability policies, the insurance carrier also has the duty to defend the professional, even if the claim turns out to be frivolous, false or groundless. In some instances, just the legal fees to defend the professional could be enormous.
It should be noted that unlike most "General Liability" policies, which are written on "Occurrence" basis, "Professional Liability" policies are normally written on a "Claims Made and Reported" basis. These policies cover only those claims made and reported during the policy period. An "extended reporting period" may be offered by the policy or purchased by the insured.
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In the event that the obligations are not met by the Principal, the Obligee will recover its losses via the bond from the Surety.
In construction business, some of the more common types of bonds are:
- Contractors License bond
- Bid, Performance & Payment Bond
- Subdivision & Site Improvement bond
Get a Bond Quote: Please Call Our office to obtain a quote for your bond
Contractors' property may consist of: