Residential Contractors do important work that encompasses a broad amount of construction. When you think of residential contractors, you might think of the company who built your new home, or any of the dozen subcontractors who did a portion of the work. Historically speaking, these business types have been easy to insure. Most insurance carriers would provide a competitive insurance plan for these companies with their liability exposure limited to the amount of work or type of project they took on. However, times have changed and so has the insurance market.
Unfortunately, the insurance market place has changed and insuring a residential contractor is no longer as straightforward as it used to be. The change in the market has been driven by two factors. First, is simply, mold. This is a result of a corrective action in one insurance policy affecting another area of insurance. Back in 2002, most Texas Homeowners Insurance carriers effectively removed mold coverage from their homeowner policy. When it comes to a Residential Contractor, the liability portion of the policy a contractor carriers may have to respond to a mold claim that previously would have been covered under a homeowner insurance policy. It’s crazy to think about, but it’s an insurance loophole that has had an adverse effect.
Second, Residential Contractors have to contend with the threat of structural defect claims. We have seen growth in class action lawsuits related to these claims in other states. This “peril” is more concerning than mold because there is not an effective way to exclude it for coverage. What many insurance companies are choosing to do is not write the policy.
So what does all of this mean for a residential contractor? What are the answers?
- Find an agent who specializes in construction
- Be ready to spend more time arranging coverage at renewal with more underwriting details
For your next insurance need, call our construction specialists at 940-382-9691.