Demolition Contractors Insurance: Commercial General Liability, Auto and Workers Compensation
by Ed Sneineh
Insurance needs for demolition contractors are not that much different from those needs of their counterparts in the construction industry, with some differences. Special attention is given to the safety measures that contractors use to prevent any potential harms to the public. Demolitions contractors need commercial general liability, business auto, property and tools, workers compensation, as well as umbrella.
Demolition Contractors Commercial Liability
This coverage is needed to provide protection for bodily injuries and property damages that are caused to other people due to the negligent acts of the contractor or its employees. The liability coverage also provides protection for advertising and personal injuries that are caused by the contractor, its officers or the employees of the contractor.
Amount of coverage varies from $300,000 to $1,000,000 each occurrence with double that amount for the general aggregate. Most contractors choose the higher limits because of the higher protection, little difference in the premiums between the highest limits and lowest limits, and because many establishments that hire demolition contractors do not accept less than $1 million each occurrence.
Underwriting information needed by insurance companies is different than that needed from other contractors. Here insurance companies focus more on safety measures taken by the contractors during the demolition process. The following is critical information needed by most insurers, and will determine not only rates but also eligibility for insurance:
- Nature and scope of demolition activities. Also, if the contractors are involved in other activities that can put them in much higher risk.
- Prior experience including insurance history and claims experience.
- Nature of projects including methods of demolitions, use of demolition equipment, use of explosives, and maximum height of constructions demolished.
- Safety measures used to prevent any harms to the public. Particular concerns is given to demolishing buildings that contain asbestos and or PCB’s. Also, questions related to whether or not the contractors have policies about obtaining written confirmation that all utilities are turned off before demolition is very important.
Price of general liability insurance is determined by the size of the contractor. This is normally measured by yearly payroll of the contractors and/ or their annual receipts. Request for certain riders and endorsements may also increase the premium.
Contractors Property, Tools and Equipment
Demolition contractors may also want to insure their own tools, demolition equipment, office furniture and their own building if they have it. The premium is determined by the nature of the property, age of property and the amount of coverage.
Coverage for workers compensation is a legal and mandatory requirement for all wage paying employers. The premiums are based on 'projected payroll' for the next twelve months, classification of workers, and amounts of coverage.
For contractors that own motorized vehicles business auto coverage may be mandatory. Price of insurance is based on garaging ZIP code, age and driving history of drivers, weight and use of business auto, and amount and type of coverage.
Umbrella/ Excess Liability
This coverage may be needed for many contractors, especially the medium to large size contractors. The coverage provides extra liability coverage on certain underlining policies (listed above) above and beyond their limits. Factors affecting prices of umbrella coverage include forms of the coverage and limits of umbrella liability.
There are many competing companies offering coverages for demolition contractors. Each company may use different criteria to accept or reject an applicant. Most standard and preferred companies have no appetite for this class of business. Therefore dealing with an independent insurance agent may be more helpful than dealing with a captive agent.
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