Masonry Magazine June 1979 Page. 21
MONEY-SAVING IDEAS FOR MASON CONTRACTORS
How To Get Adequate Property/Casualty Insurance at Reasonable Rates
by RICHARD HARRIS
Product Manager
Insurance Company of North America (INA)
As a member of the building and construction industry you don't need to be reminded that, when bidding a job these days, the slightest miscalculation in costs can mean the difference between profit and loss. And, with rapidly rising prices for materials and labor, the contractor must cut as much fat as possible from his operating expenses.
Unfortunately, out of a concern for protecting the bottom line, many contractors are not carrying adequate property and casualty coverage to protect them from financial catastrophe. Suppose you eliminate some "all risk" property damage insurance to reduce costs. Incidents such as theft, fire, structural collapse or water damage could significantly reduce your working capital and endanger your overall financial condition. In the long run it would hardly have been a "profitable" savings.
The mason contractor who shops for insurance coverage on the basis of price alone is also playing with fire. It is important to select an insurance company capable of providing specialized loss control programs, fair claims service and one that charges reasonable (not necessarily the lowest) rates. If you shop for coverages on a price-only basis, you will probably not end up with the kind of insurance your company really needs.
The best way to begin a search for adequate coverage at a reasonable rate is to find a professional insurance agent who knows the contracting business. This may sound elementary, but it is surprising how many contractors do not engage the services of an agent who has experience working with contractors to meet their insurance needs.
What To Look For In An Agent
When we interviewed contractors recently in the course of developing a new insurance program, we heard comments such as: "My agent recommended three different insurance forms. I looked these forms over and they're so different I didn't know which to choose." Each time a contractor told me that. I asked him how he finally made his decision. Generally the reply was the same: "Since I didn't know what I was reading. I gave the forms back to the agent and let him make the decision." Hopefully, in those cases, the agent was a professional who knew the construction business so he could select the best form.
Obviously, it's very important to know your insurance broker or agent. You may say. "Of course, I know him. We play golf together, or he's my brother-in-law." But the real test is do you know him as a professional? You should be able to answer these three questions about your agent or broker:
1. Does he continually strive to maintain and improve his knowledge skills and competency?
2. Does he know and follow the rules and regulations governing the insurance industry and avoid any conduct or activity which could cause harm to his clients?
3. Just how interested is he in looking out for his own interest rather than those of his clients?
There are numerous other points to look for in selecting the agent who will write your insurance business. You will want to look for an individual who is willing to continually survey your risk exposure and is willing ro recommend what you should be insuring. He should seek to develop an overall program fitting your individual needs. Your agent should also be associated with a firm which has a continuing relationship with a number of insurance markets and that has a good claims department. If your contracting operation is large, you may want to look for an agent who is licensed in a number of states, does a significant amount in annual premium volume, and carries insurance agent's errors and omission insurance.
Know What You Are Buying
Once you've selected an agent and he's recommended specific coverage, you should be aware of what you have and have not purchased. While insurance policy contracts can be somewhat complicated, you should understand something about the product you are buying. You needn't become an expert. That's why you're dealing with an agent who is knowledgeable about your industry. But But just as you don't buy roofing, brick or nails without knowing what you're buying, neither should you buy insurance without knowing something about the product.
You should develop an understanding of the basic coverages that every contractor needs, including property insurance for your office and warehouse, liability coverage for your personal premises and for the job site, tools and equipment coverage installation or builders risk insurance covering the work being performed, completed operation coverage for protection against liability incurred after you have finished the job, automobile liability and physical
About the Author
►Richard J. Harris.
Philadelphia, Pa., was appointed product manager of Insurance Company of North America (INA) in 1977. He is responsible for construction and extended care facilities in the commercial insurance department. Mr. Harris joined INA in 1976 as associate product manager. Before that he was associated with Maryland Casualty, Royal Globe and General Accident, serving in various underwriting and management positions. A graduate of LaSalle College, Mr. Harris has written numerous articles dealing with the insurance needs of specialty and general contractors.