Corey Slavik, Property and Casualty Advisor, HUB International
There are many risks involved in roofing. Roofing contractors who have the proper insurance coverage, beyond just commercial general liability, can better protect their business and gain a competitive advantage.
There is little room for error in roofing. Faulty workmanship, the use of defective materials and poor design are all risks roofing contractors must avoid when performing their work. Large-scale mistakes, like propane torches left overnight that cause a fire, have become major liabilities for roofers. Problems can also arise in a more indirect manner, such as a failure to secure proper flashing during installation that leads to water intrusion; or, a miscalculation of the weight needed to secure an HVAC unit on a roof that leads to distress of the building’s exterior foundation and walls.
Any of these scenarios can cause hundreds of thousands of dollars’ worth of damages and put your roofing company in peril. Smart businesses know that to recover quickly from a setback, they need to be prepared. Having general liability insurance is a crucial form of protection for your business but it often isn’t enough to fully cover the costs associated with work-related incidents.
In the alphabet soup of insurance – GL, E&O, P&C, etc. – it can be difficult to determine the essential coverages that a roofing contractor in the state of Florida may need. Here are details on each of the main insurance types you should consider obtaining to protect your business.
A general liability policy covers businesses from financial losses related to property damage, accidental personal injuries or lawsuits. Notably, it does not include employee injuries, tools or work vehicles, punitive damages, or errors and omissions.
There are two types of general liability insurance: claims-based and occurrence. Claims-based, which tends to be cheaper than oncurrence, only covers incidents where the claim was made during your period of coverage. So, if an accident occurs and you weren’t aware of it until after your policy had expired, you won’t be covered. Occurrence insurance, on the other hand, provides coverage for any incident that happens during your coverage period, even after the policy is no longer in place.
Workers’ compensation is an essential insurance coverage for roofing contractors due to the inherent dangers of the trade. If an employee is injured on the job and you don’t have workers’ compensation insurance, your roofing company may have to pay for medical treatments and missed wages out of pocket. Also, when an employee accepts workers’ compensation benefits, they cede
the right to sue the company, which protects you from exorbitant punitive damage costs in court. Most states, including Florida, mandate that employers purchase workers’ comp.
Surety bonds are another important coverage for roofing contractors. Sometimes known as contractor bonds, they pay your customers if you don’t complete a job, go out of business, go bankrupt or simply run into unforeseen issues. Having this type of coverage may be required for larger contracts; ultimately, customers prefer contractors with surety bonds because they know they will be compensated if you fail to finish the work.
Errors and omissions (E&O) insurance coverage, as the name suggests, covers businesses for mistakes, giving bad advice or failing to perform certain aspects of the job. An E&O policy might cover, for example, the businesses that made the flashing mistake and HVAC calculation blunder mentioned earlier. E&O insurance is similar to general liability insurance but is specifically related to the professional services you provide, not the property, equipment or operations.
Commercial auto insurance covers your company vehicles when an auto accident causes third-party injuries and property damage. It also provides coverage to repair company vehicles that are damaged by weather damage or vandalism. Purchasing commercial
auto insurance is mandatory in Florida, but it’s also smart business to protect such key assets.
Another key asset to protect for the health of your business are your tools and equipment. Tools and equipment insurance, also known as tool or equipment floater insurance, can pay for the repair or replacement of important tools like shingle cutters and roofing knives. This type of insurance covers both damage and theft of tools and equipment; it does not cover damaged or stolen materials such as roofing shingles.
Umbrella insurance is a type of add-on coverage to an existing policy that raises the maximum coverage for your business. Depending on the amount of risk you’re assuming and the types of projects, equipment and properties your business maintains, your existing coverage may be too low to fully protect you in the case of adverse events.
Insurance coverage can protect your roofing company from potentially catastrophic losses associated with running your business, allowing you to rebound and continue to grow. Just as importantly, though, is how the proper coverage can impact your customer’s
perception of your business. Fly-by-night contractors without the proper insurance don’t have the longevity or respect of professionals with solid insurance coverage.
Corey Slavik is a Property and Casualty advisor for HUB International in Melbourne. He is responsible for new business development and maintaining client relationships. Corey specializes in complex Property and Liability Insurance and Risk Management programs for businesses, with a focus on Contractors, Commercial Real Estate and Manufacturers.
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