Most companies will need to undergo some remodeling, repairs, or possibly even an expansion at some point or another. Such work is most often outsourced to a vendor.
Before you hire a vendor to do work at your facility, you want to protect the financial security of your business and make sure that their liabilities don’t suddenly become a liability for you. For example, you’d likely feel bad for all involved if a contract worker suffered an injury working on your project. However, you might not realize that you too could be involved. If that injured contractor wasn’t insured, then it could involve an expensive lawsuit against your business. Such scenarios often prompt business owners to question how they can best protect themselves when hiring a vendor.
You might get lower bids by vendors not licensed and insured, but an unexpected injury later could result in insurmountable legal costs that would far surpass any savings. It can’t be emphasized enough just how important it is to hire only reputable, licensed, and insured companies.
How Do I Know If My Vendor Is Licensed?
Finding out if a contractor is licensed isn’t very difficult, as any licensed contractor must display their state licensing number on all marketing and advertising materials, such as phone book, billboard, and newspaper ads; the company logo on their building sign or company vehicles; and even the materials they pass out to the public.
How Do I Know If My Vendor Is Insured?
Finding out if a contractor is insured isn’t quite as simple as looking at their ads, but it’s a vetting step that you certainly don’t want to skip. Never work with a vendor that doesn’t have Commercial General Liability insurance and Workers Compensation. At a minimum, the Commercial General Liability insurance policy will cover advertising injuries, personal injuries, bodily injuries, and property damages.
If your contractor doesn’t voluntarily offer to show you a certificate of insurance as proof that they’re covered by a Commercial General Liability policy, then you should ask for it. Don’t accept that they’ll bring it by after they’re hired and don’t forget to check that the expiration and effective dates will be congruent with the dates of the project.
What Else Can I Do to Protect My Business?
Additionally, you might consider taking the following steps:
- Make a list of approved vendors that are both licensed and have shown proof of insurance.
- Ask the contractor’s insurance agent to mail you their certificate of insurance.
- Ask that your company be added to the contractor’s General Liability policy as an additional insured until the project is completed.
- Consider only hiring a contractor that has insurance limits equal to your own.
- Ask the contractor to sign a written legal contract indemnifying your company from a liability claim.
- Never work with a contractor that will need to use your tools or equipment to complete the job. Don’t even lend such items to the contractor. If your equipment or tools are defective and cause a contractor to be injured, it could result in a lawsuit.
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Our hands are used in almost all daily activities, work or leisure. But, for some reason, we often overlook just how frequently our hands are used until they are injured.
According to the National Safety Council (NSC), the hands are involved in one of every five occupational injuries. This statistic really isn’t all that surprising once a worker stops to consider the array occupational hazards, such as tools, solvents, and chemicals, that are capable of causing burns, contusions, and lacerations to the hands. That said, workers can protect their hands and avoid a lot of unnecessary injuries by taking a few precautions.
Material Safety Data Sheet. Some chemicals can burn your hands immediately following contact. Before handling any chemical, it’s of vital importance that you’re familiar with Material Safety Data Sheets (MSDS), as these forms will instruct you on the safe handling and use of certain potentially harmful chemicals.
Hand Washing/Cleaning Procedures
- Apply lotion if your job requires frequent hand washing.
- Use mild soap and water to wash hands; dry them thoroughly.
- Avoid harsh and abrasive cleaners.
- When removing tar, grease, or paint, use a waterless cleaner.
- Never wash hands with benzene, paint thinner, gasoline, or other harsh solvents.
- Flush hands under running water for 20 minutes or longer after your hands come into contact with any corrosive chemical.
- If a minor skin laceration occurs, wash it immediately and seek medical treatment.
- The MSDS can alert you to what type of glove should be donned when handling potentially harmful chemicals.
- Throw any frayed, tattered, or worn gloves away.
- Never share gloves with co-workers.
- Never immerse your hand in chemical agents, even if gloved.
- Asbestos or leather gloves are used to protect against heat.
- Neoprene or rubber gloves are used to protect against corrosive chemicals.
- Cotton, leather, or PVC gloves are used to protect against abrasives.
- Synthetic knit or cotton gloves with gripping dots are used when hand-grip is needed.
- Kevlara, heavy leather, or metal-mesh gloves are used to help prevent cuts to the hand.
- Never wear gloves with any metal features when working near electrical hazards.
- Avoid wearing gloves around moving equipment.
Avoiding Contusions and Lacerations
- All tools should be properly maintained on a regular basis.
- Safety guards should never be removed and a tool without the appropriate guard shouldn’t be used until it’s in proper working order.
- Lockout equipment when making repairs or cleaning it.
- Wear metal-mesh, leather, or Kevlara gloves when handling or operating sharp and bladed tools.
- Don’t do a job if you don’t have the appropriate tool.
These simple safety precautions can help you keep one of your most important assets, your hands, intact.
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When making a significant purchase, you do your homework. Consumer reports on electronic gadgets to safety ratings for cars and inspection of a new house are all part of your homework. Why wouldn’t you think you should do the same with insurance?
Myth #1: Most people believe all insurance is the same
It’s not. Not all insurance companies are all financially equal. That can cause some problems in the future for claims. To do your homework about the financial strength of the insurance company, go to A.M. Best Co. They are an independent provider of insurer ratings.
Myth #2: Every insurance company provides the same coverage
Most insurance companies provide similar coverage, but every insurance company is different. That can mean unique conditions and limitations.
Myth #3: All customer service, including claims processing, are the same with every insurance company
Every company is different and that means different standardized policies for handling claims and basic customer service calls. You can go to your states Department of Insurance to find out where you company ranks with customer complaints.
Myth #4: There is no flexibility in the cost of your insurance
Contact us and we will work with you on how we can save you money based on your lifestyle or any other possible changes to your deductible. We can also shop around for you to find the policy that fits your needs.
Content provided by Transformer Marketing.
Builders and contractors who buy Commercial General Liability policies with the impression that they will keep them safe from allegations of inadequate or faulty work should beware. It’s important to know that a CGL policy does not provide coverage for work that is faulty. In order to qualify for payment under a CGL policy, there must be a specific type of occurrence that causes property damage. The terms in a CGL policy define an occurrence as an accident. This includes repeated or continuous exposure to conditions that result in bodily injury or property damage. The damages or injuries must occur during the policy period in order to qualify for coverage. These injuries or damages must not be intentional. CGL policy terms specify that property damage is a physical injury to tangible property. This includes all losses of that property that happen as a result of the occurrence. It also covers the loss of use of tangible property that is physically unharmed.
When disputes arise as a result of defects in a building project, there are several factors that must be considered to determine whether the occurrence requirements and property damage requirements have been satisfied. The factors include the work or products that the contract states the policyholder was required to provide, the policy’s definitions, the alleged faulty construction job and the nature of the cause of the faulty work. These dispute conditions apply to defects in a structure sold or built by the contractor. They also apply to defects in a product that the contractor manufactures and sells independently.
If you have this coverage or are considering it, one of our agents will be able to analyze the policy’s terms. We will be particularly interested in the definitions of property damage and occurrence in the policy. This is crucial because each state’s law differs regarding such issues. Our agent will be able to advise whether or not the policy is in accordance with state laws. Some policies’ terms may indicate coverage for situations that a state’s laws may not provide coverage for. Keep in mind that state laws supersede anything written in an insurance contract. Some states specify that third-party property damage is a requirement for potential CGL coverage. Many states also specify that there is no coverage under a CGL policy for replacement or repair of damaged goods provided by the contractor. It’s also important to know that the work of a subcontractor is not covered under this law.
New Jersey was the leading state in addressing and defining defects in a CGL policy. A clear distinction was made between the replacement and repair of faulty materials. This was not considered as property damage covered under the CGL. However, third-party damage to a property may be covered. Since New Jersey’s definitions emerged, many other states have embraced the state’s view of business risks not counting as third-party property damage in the terms of a CGL policy. To better understand what the terms mean, what is covered and what state laws are in effect, contact one of our agents.
Content provided by Transformer Marketing.
As every business owner knows, risk is an unavoidable part of doing business. However, it is manageable and controllable. Although it is a challenge that requires time and experimentation, finding a perfect balance between profitability and peace of mind is essential. It’s impossible to eliminate risk completely, so it’s important to set realistic goals. Policies that are enacted in an attempt to fully eliminate risk could actually hamper business growth.
The Importance of Risk Management. The common concept of risk management among small business owners involves simply purchasing regular insurance protection. Other aspects of protection often escape consideration. Risk management is much more complex than simply purchasing insurance and implementing rules. These are both necessary parts of every plan. However, there are many other things to consider.
Tips for Implementing a Realistic Risk Management Plan. It’s best to start with a simple plan that is easy to follow. The prime goals should be mitigation and management of business risks. After trying the plan, analyze it and make any necessary changes or additions. Consider the following steps in order to make a positive change:
1. Identify the Risks. There are some risks that are universal. However, there are also some that are specific only to certain types of businesses. It’s important to conduct a thorough risk analysis to identify them. The best way to accomplish this is to use a standard risk checklist. There is a Small Business Insurance & Risk Management Guide available from the Small Business Administration. This guide is helpful in outlining potential risks. While going through the list, pay close attention. Most business owners are able to think of other potential risks that are unique to their situation during this process. Some of the most important initial risks to consider include:
- Property losses that occur from loss of use, physical damage or criminal activity.
- Liability losses that happen to customers and are the fault of the business.
- Business interruption losses stemming from fires, natural disasters or other unpredictable occurrences.
- Key person losses or the loss of important employees, which results in a negative impact on the company.
- Employee injury losses that occur when an employee is injured on the job and must be compensated.
2. Determine How Vulnerable the Company Is to Various Risks. Consider the various risks and how much each one would cost the company. Not all types of companies are as vulnerable as others. Companies with high vulnerability to expensive risks need to make those specific areas a strong priority in their risk management plan. The risks that aren’t worth worrying about should receive a much lower priority. Keep in mind that it’s not feasible to eliminate every possible risk. However, some need much more consideration than others. For example, a paper manufacturing company should consider the risk of employees losing limbs on dangerous presses in the manufacturing line before they become concerned with possible paper cuts to fingers of employees in the inspection department. As an overall rule, the cost of preventing the risk should never exceed the amount the estimated loss that might result from that risk.
3. Create a Contingency Plan. There is more to this aspect than purchasing insurance. Be sure to implement plans that place employee safety higher than efficiency. Install a security system to protect all property from theft and damage. Avoid transactions with unknown customers. Implement plans to train supervisors to minimize loss of key employees.
4. Purchase Adequate Insurance. In addition to purchasing enough insurance, it’s imperative to purchase the right types. Some of the key types of coverage to purchase include:
- General Liability insurance, which covers the legal liabilities faced from injuries to third parties. Medical expenses, property damage and bodily damage are typically covered.
- Professional Liability insurance, which covers allegations of malpractice, negligence and other errors in services.
- Product Liability insurance, which covers the expenses related to injuries or damages resulting from a defective product. This is essential for all companies producing tangible products.
- Commercial Property insurance, which covers loss and damage costs for business properties. Business interruption is typically covered by this provision.
5. Revise as Necessary. Be sure to review and update risk management plans regularly. Reassess risks and make any necessary changes. It’s important to have regular review meetings with department heads, owners and a risk management consultant. Be sure to inform the insurance company of any changes or new risks.
Business owners who plan to raise capital from investors must be especially vigilant in their risk management planning. Having a good plan and updating it regularly is important for gaining their trust and making them comfortable with the opportunity to invest.
For most companies, Business Interruption insurance might be as important for survival as Fire coverage. It is difficult to find a business that did not obtain insurance for windstorm and fire damage. However, too many business owners do not consider how they would continue functioning if a windstorm or fire actually did damage their property. This is especially true with small business owners. Business Interruption insurance is not sold independently. It is an additional type of coverage for a property insurance policy. In some cases, it may be included in a package policy for business owners.
Businesses that must cease operations completely while the premises are repaired often lose money to their competitors. Quickly resuming business after a disaster is essential for survival. If a company must vacate the premises because of damages from a disaster, Business Interruption coverage extends protection for lost income. It also provides coverage for the profits that would have been earned if the business had not sustained damage. The profit reimbursement is based on an average of financial records, so it is imperative to keep them up-to-date and accurate. These beneficial policies also cover operating expenses that may not be halted due to the damage. For example, electricity would still be needed for most businesses, so the insurer would provide money for electricity bills.
It is important to make sure the policy limits are generous enough to cover the business for more than a week. Keep in mind that it might take much longer than most people anticipate to resume operations. If a major disaster happens, it can take several weeks to resume operations. The waiting period for Business Interruption coverage to start is usually about 48 hours. Policy pricing is based on the risks a particular business faces. Businesses in some locations are more likely to sustain certain types of damage than others. In addition to this, the nature of the business plays a major part in determining policy pricing. For example, a restaurant would be more expensive to insure than a travel agency. This is due to the restaurant’s heated appliances and grease creating a higher risk for fires. Although a restaurant would have a hard time operating out of an alternate location, the travel agency would easily be able to do this. These are just examples of some of the issues determining premium amounts. To get a clearer price estimate for a specific business, discuss individual business details with one of our agents.
Another type of protection to consider with Business Interruption coverage is extra expense insurance. This type of addition reimburses companies for slightly more than the amount of regular operating expenses. By receiving extra money, the business is less likely to have to shut down for restoration. If any extra expenses decrease business interruption costs, they will usually be covered. Extra expense coverage alone might be enough to compensate some businesses.
Commercial Liability Insurance is the most detailed reference available on commercial general liability, owners & contractors protective liability, liquor liability, products completed operations liability, railroad protective liability, pollution liability, and umbrella liability insurance.
You get a “Two for One” deal because Commercial Liability Insurance includes CGL treatment and umbrella policy analysis, rather than paying a separate fee for umbrella information.