Out of the hundreds of moving parts and complexities involved in an average construction project, the contract is still one of the most complex and often misunderstood pieces of the puzzle.
And while most contracts are heavy on operational details, the insurance and risk transfer details too often get glossed over. That’s especially true when the contract is written by someone who doesn’t understand insurance coverage. And too many contractors simply sign on the dotted line without digging into those crucial insurance and risk transfer details, especially when business is competitive.
Sound familiar? It’s a perfect way to end up walking a dangerous tightrope, where you’re always one slip away from financial ruin.
The fact is, too many construction contracts fail to properly transfer risk down the line to the subcontractors’ insurance carrier. And transferring that risk isn’t just good business practice – it’s a business necessity. It’s how you as a GC protect yourself from potentially devastating liabilities in the event your own policy won’t cover you for a claim. It’s also how you protect your own insurance program and loss history, which helps you stay competitive and makes you a more attractive customer to an insurance carrier.
All those things are crucial, especially if you’re doing business in the New York tri-state area. Consider these facts:
- Construction accidents are on the rise. The Bloomberg administration has reported that the number of construction accidents jumped 72 percent last year, while injuries were up 40 percent.
- Insurance carriers are changing the game and getting choosier. Your subcontractors have plenty of insurance carriers to choose from for their GL coverage in the tri-state area. But many of those carriers are writing policies that have exclusions and warranted forms and provide little or no coverage for catastrophic claims. Labor Law 240/241, contractual liability, residential exclusions, and height exclusions are among the most common to be found in the fine print. Many carriers are now requiring their general contractor customers to have a system in place for reviewing their sub’s coverage for exclusions and limitations.
- Just one uncovered $1 million-plus claim can destroy your profits for years. If one of your sub’s employees gets seriously injured on your jobsite and the sub’s carrier has an exclusion in place that results in denial of your claim, it’s going to cost you. Not only will your future insurance premiums go up, but your business will be more susceptible to potentially devastating uncovered losses, and your loss experience and profitability will both take a big hit. That’s the kind of slip off the tightrope that can land you in financial dire straits for a long time.
Keep your business off the tightrope and firmly on solid ground
The ultimate solution is BNC’s Subshield™, a state-of-the-art certificate tracking and insurance verification system designed specifically for general contractors, developers, and real estate owners and managers. The advanced “Vendor Qualification” software system, combined with BNC’s extensive construction insurance and risk management experience, can significantly reduce your exposure to third party risk and enable you to ensure your subcontractors have proper coverage. With BNC’s Subshield™, you can:
- Identify subcontractors with deficient coverage
- Cut your administrative costs
- Reduce your indirect costs in a labor law claim brought about by a sub’s lack of proper coverage
- Lower your direct costs with your insurance company
Contact us today to find out more about the BNC Subshield™, one of the most powerful risk transfer and certificate tracking systems in the industry.