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Paint Can & Tray with Roller


Important Considerations in Choosing an Agent to Service Your Auto or Truck Repair Business



Knowledge of the Industry


Experienced Staff


Fast Certificate Processing


Claims Representation


Billing & Finance Options


Support Backup


Access to Multiple Markets

What types of coverage are important to consider?



Painter & Paper Hangers


Inland Marine


Installation Insurance


Care, Custody, and Control


Silica & Lead Exclusion


Maximum Height Restriction


Loss of Business Income


Employer Practices Liability


Hired & Non-Owned Auto Liability


Personal & Advertising Injury


                    

Once the exposures are identified, ways to control the losses can be addressed.  This is often done by asking questions related to various aspect of job conditions, frequency of hazardous exposures, the habits of the workers with respect to safety and conditions of the equipment and safety devises.   


Here are just a few questions or concerns related to the exposure of heights and the risk of falling from ladders or scaffolds:








Once these issues are addressed. The risk tolerance of the contractor needs to be determined.  Is the contractor willing to assume most of the risk associated with the jobs or are they concerned about financing the risk?


Most contractors would look to secure general liability insurance to protect against third party bodily injury and property damage losses as well as workers’ compensation to protect against injuries to their employees.  


Commercial General Liability


Liability insurance provides coverage for third party liability losses due to bodily injury, property damage, and personal injury (hurting of the persona) caused by accidents and/or acts of negligence by a named insured.  The coverage is subject to the terms, conditions, limitations, and exclusions of the policy and within the covered territory.  Generally, liability insurance provides coverage for premises hazards, such as trips and falls; operations hazards such as injury resulting from the delivery of stock; completed operations such as injury caused by the installation of the goods; and personal & advertising injury such as copyright & trademark infringement and other acts of damage to the persona of an individual or entity.


It is important to note that most general liability policies do no cover faulty workmanship nor damage to the part of the work being preformed.  In addition, there is usually a care, custody, and control exclusion that negates any coverage for damage to the product or area being worked on. The rationale is that liability insurance is not intended to replicate a warranty or guarantee of the contractor’s work.  However, usually the resulting damage, such as spilling of paint on a carpet would be covered, however it is very important to read the terms & conditions as well as the limitations & exclusions to determine is this as well as what limits would apply.  


How is the cost of these policies determined?

Most carriers rate the cost of liability insurance based on payroll however some may rate on employee count or even sales.  If payrolls are higher due to collective bargaining agreements or prevailing wages, head count could be an option to lower cost.  It should be noted that the cost can be adjusted based on the percentage of interior versus exterior works and commercials versus residential painting.  Other factors could include lead paint & mold remediation, sand blasting, power washing, and chemical spraying or waterproofing.    


Commercial Auto and Truck Insurance

Auto and truck insurance provide coverage for liability, uninsured motorist, no-fault protection, and coverage for the physical damage to the fleet. Also worth considering are rental hire and non-owned liability, rental reimbursement, and glass.  Generally vehicle insurance is covered under a separate form or policy. The rating is determined by classification, type, year, make & model, usage, radius of operation, value, driver information, location, among other factors.  It is especially important to determine the limits of liability when insuring trucks.   Most state DMV’s have specific limits of liability required.   

It is important to properly cover the vehicles used in business as the coverage is usually different with a commercial auto policy compared to a personal one.  Loading and unloading is generally covered by a commercial auto, but often excluded under a personal policy.  In addition, hired and unowned auto can normally be added to a commercial auto policy which provides coverage for the usage of a rental vehicle or one used in the course of business owned by someone else such as an employee.  

Finally, many painters haul ladders and scaffolding equipment on the trucks which are susceptible to falling off and damaging other vehicles or injuring others.  A claims denial due to misrepresentation of vehicle usage can be serious matter beside the potential legal aspects.  


Commercial Property

Commercial property policies typically cover perils on a named basis.  Therefore it is important to determine the value of what to insure and what risks are prevalent to the business.  These policies are generally written on either a basic, broad, or special basis. Basic and broad define which perils are covered, while special covers most direct physical losses except for the exclusions subject to the terms and conditions of the policy.  

Inland marine insurance provides coverage for property in transit or temporarily located away from the described premises. Painters and paper hangers general own ladders, scaffolds, compressors, power washers, and other expensive equipment.  Inland marine insurance is generally added to a commercial policy for an additional cost or can be secured as a separate policy.  It is important to purchase this coverage if theft or damage to property kept off premises or in transit is a concern.  Most inland marine forms require the property to be scheduled, however some carriers will provide it on a blanket fixed limit basis.    

Installation insurance or floaters can provide coverage for loss or damage to the materials used in the construction or renovation.  Paint and wall paper along with other materials left at a job site are subject to damage caused by water or fire and losses by theft.  Installation insurance may require the contents to be scheduled, however many carriers will provide the coverage on a blanket fixed limit basis.  

Machinery & equipment can often be scheduled by classification.  Heavy or mobile equipment is often excluded on a standard business personal property form, hence it prudent to schedule this equipment usually as a separate floater with its own limits.  Often times, this allows for greater flexibility and control with the insurance costs and coverage.  Another advantage of itemizing the equipment is the ability to specify the perils of coverage by category.  

Loss of Business Income & Extra Expense or BI & EE - Generally the coverage pays for the continuing operating expenses and net profits before taxes due to a loss caused by a covered peril.  It usually requires a specific monetary limit scheduled and a time period or term listed such as a period of three months.  

Extra Expense provides for payment due to a covered loss to help mitigate the claim such as with the loss of business income.  This may include the rental of a temporary location and the cost to transfer the contents to the location to help resume operations quicker than if no measures were taken.  It may also include the payment for temporary help to expedite business operations.  

Workers’ Compensation & Statutory Disability Insurance Read more >>

All states have workers’ compensation laws that require organizations to provide coverage or a means to pay for it’s employees claims in the event of an on the job injury or illness.  Please refer to the insurance department or the department of labor in the state for which the business operates and the employees are located or work in.  Statutory disability may also be required which provides coverage for off the job injuries and illnesses.

By William F. Schaake, CIC, CRM © 2012 All rights reserved

Risk Management Techniques and Insurance Essentials for Painting & Paper Hanging Contractors


By William F. Schaake, CIC, CRM


Painters and paper hangers have many different roles with respect to their craft.  Residential painting can be vastly different than commercial or industrial.  Therefore, the cost of insurance for general liability and workers compensation can vary widely based on the type of work being preformed. This is due to the level of risk involved. These risk exposures are generally categorized by the hazards inherent to work process such as the exposure of heights, toxic fumes, silica, and/or lead poisoning.  It is these hazards that typically cause insurance premiums to escalate with certain preparation methods, job site conditions, environmental issues, and materials used.


To design an effective insurance program, several factors should be considered and this may be accomplished by listing and ranking the exposures and how a potential claim could impact the contractor’s business.  Below is an example of liability exposure matrix for an residential painter that frequently uses ladders, occasionally remediates lead & mold and rarely sandblasts.  The general liability and workers’ compensation policies would be tailored based on these exposures and their impact on the business:




































Perils and Risk Exposures

Likelihood of a Loss

Impact of a Claim on the Business

Fall

Moderate due to job conditions and frequency of usage of ladders and scaffolds

Severe - Death or serious injury can result.

Silicosis

Low due to safety masks used and the infrequency of the work

Long term exposure poses serious employee concerns

Lead Poisoning

Moderate due to the employees failing to use safety gear

Moderate to severe as typically claims result in topical treatment but long term exposures are unknown

Breakage

Frequent due to moving furniture and items within the area

Low to moderate based on value of the loss

Auto Accident

Moderate due to the number of vehicles used and the employee driving habits

Low to severe based on the type of accident and the injuries involved

Painting & Paper Hanging Contractors Insurance Basics

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