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Buying Contractor Insurance in Tennessee – Why Consensus with Building Owners is Critical
A new emphasis on building consensus between general contractors and building owners has emerged in Tennessee. Essentially, building owners and contractors need to agree on a variety of questions that range from who will pay the insurance premiums and deductibles and which party is named as the insured to which party must buy the coverage.
The two most critical questions about contractor insurance in Tennessee are:
- Who has the responsibility for buying insurance?
- What insurance coverage needs to be purchased?
It’s important for both parties – building owners and contractors – to recognize that there is a shared peril on any job site. Equipment fails, accidents happen, and if everyone on the project is covered by a first-person policy, there may be less need to point fingers and find out who is at fault by involving lawyers.
Over the years, the original assumption that general contractors were best suited to determine their insurance needs under a builder’s risk policy has evolved. The view that building owners are in a better position to gauge the impact of soft vs. hard costs to be covered is strongly supported now. After all, the building owner is the one left holding the bag if something happens and the contractor’s insurance doesn’t cover the loss.
The hard costs, or the amount of money needed to repair or replace damaged or destroyed property on a renovation or building site, are different from the soft costs. These largely result from the interruption of work when an accident happens. Soft costs include:
- Additional interest costs
- Accumulated property taxes
- Time delays and any related penalties
If a general contractor buys their liability policy, it should have the appropriate business interruption, time element, and soft cost coverage. However, in order to do that, the contractor needs the cooperation of the building owner up front – at the start of the project.
If contractors’ insurance in Tennessee is to be effective, building owners and contractors working together will make a big difference. They will be able to ensure that the risks are shared in an equitable manner – a situation that can pay big dividends in the long run for both building owner and contractor.
Call The Nowell Agency Inc. at 601.992.4444 to speak with one of our experts in contractor insurance in Tennessee, or request a quote online and we’ll call you