Thursday, May 1, 2014

Per Project General Liability Insurance for a Contractor's General Liability

A big expense factor in a contractor's construction bid will always be the cost of the liability insurance for the project. The contractor's existing general liability policy may not be sufficient to meet the requirements of a specific job being bid for but upping the coverage on his regular liability insurance could leave the contractor in a grossly over-covered position after the job is done. A per project policy is ideal for construction bid circumstances like this.
A per project liability insurance policy is exactly what it reads as. The contractor can get a liability quote for precisely the required amount and for only as long as the specific job is underway. This means the contractor will have the correct amount of insurance at the right time. He will not have too little during the job and will not have too much after the work is finished either. Per project general liability is ideal for a contractor's general liability.
Two critical factors should be considered when looking into per project insurance. The first is the maximum payable amount and the second is the actuarial claim rate.
The individual or more likely the corporation tendering out the bid will stipulate the minimum amount of liability insurance requires. Let's say the required insurable amount is for twenty million dollars. That total coverage may be required for the bid but during the general business of the contractor, perhaps ten million is more than sufficient. A per project general liability package could be put in force just for the term of the contract.
The other factor is the actuarial. That is the incidence of claims for a particular type of application. For instance, if the contractor is doing dangerous work like welding underwater the claim rates are much higher than work as an interior painter so the rate per thousand dollars worth of insurance will naturally be greater for the underwater welding. A contractor needing liability insurance may often be quoting for work that is of a different actuarial rate.
Administration of the contractor's office and his doing quotes involves much less risk than completing the contracted work does so per project general liability would certainly be a better value than a global policy that doesn't address the differing needs.
Per project contractor general liability insurance isn't an entirely new product but it isn't a policy that most insurance underwriters have not been overly eager to offer. Insurance agents prefer a long-term deal like a life insurance policy that simply has premiums running to eternity and beyond. Per project coverage requires the insurance for only a fixed term and at a fixed rate. Per project general liability insurance is optimal for the contractor's insurance and per project general liability insurance can still be found, and is certainly worth finding, even if it takes some extra looking.

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