Given today’s legal environment, property owners must protect themselves by requiring roofing contractors to carry adequate insurance coverage. Because roofing is a high risk classification, insurance costs are a considerable expense. For this reason, many contractors carry only the minimums mandated by the state, which most will agree are inadequate. In fact, some important types of insurance are not even required by the state, which may expose a property owner to unforeseen liabilities. It is very important to review a potential contractor’s insurance to be certain that you, the consumer, are properly covered.

Completed Operations

Workers Comp Employers Liability

Automobile Bodily Injury

Automobile Property Damage Liability

Contractors Equipment Insurance

Builders Risk

Business Interruption Insurance

Pollution Liability

This coverage protects you if your contractor were to damage your property i.e. catches the building on fire. It also covers bodily injury and property damage to others who may be on your property if they are hurt by the contractors operations i.e. hot tar spills on them, a hammer falls off the roof and strikes them. Florida law only requires $100,000 of coverage.

Once the contractor completes their work and leaves the property, this covers damage that could occur which was caused by their work i.e. the roof collapses because of excessive standing water. It does not cover the interior from water intrusion damage. This coverage is not required under Florida law.

If a contractor’s equipment is stolen from the job site, is the owner or the contractor responsible to cover the loss? This policy covers the contractor’s equipment against theft or loss. This is not required by law.

If material is stolen from the job site, whose material was stolen? Is the owner or the contractor responsible to cover the loss? This policy covers the material stored on the job site. This is not required by law.

Coverage is provided for third party damages caused by a release of pollutants. Most General Liability Policies specifically exclude Pollution Coverage. Also, many pollution policies cover the insured’s property but not their work sites.

If a disaster occurs and damages or ruins a contractor’s ability to operate normally, this coverage provides the needed cash to cover expenses so that they can continue as a business. This helps to ensure that your project will be successfully completed. This is not required by law.

Workers compensation insurance, which is required by Florida law, covers lost wages and medical expenses for an injured worker and generally precludes the injured from filing a civil suit for damages. However, if employer negligence is found to be the cause of the injury i.e. requiring workers to use unsafe equipment or to work in what OSHA deems an unsafe work environment, then Florida allows for civil litigation which is not covered by standard workers compensation insurance. For this protection, Employers Liability must be added to the standard policy. If your contractor lacks this additional policy, then the building owner’s insurance could be held liable.

This is often the most overlooked area of contractors insurance. If a contractor were to hit someone on your property with their automobile, this policy provides coverage for damage to their person and their automobile. Florida law requires $50,000 for Bodily Injury and $25,000 for Property Damage.

A performance and payment bond (P & P Bond) is a guarantee by an insurance company (Surety Company) that a project will be completed in the event of default by a contractor. It further guarantees that the costs for all labor and materials will be paid and that no liens will be placed on your property. If a contractor defaults, the Surety Company takes the project over and does whatever is required to complete it. In short, a P & P Bond guarantees a lien free, completed project, built to the plans and specification, at no additional expense to the owner.

One of the most effective methods of determining the overall stability of a contractor is to check their bonding capabilities. A surety company maintains a staff of construction accounting specialists and construction management experts that scrutinize various aspects of a contractor’s business.

The Surety’s accounting examination is considered unparalleled in the construction industry. Their construction risk management team reviews numerous financial ratios, based on a contractor’s audited financial statements, in an effort to eliminate the risk that the Surety may have to pay a claim.

• Single Job: $ 10 Million
• Aggregate: $ 20 Million
• Surety: International Fidelity Insurance Company
• A.M. Best Rating: A (Excellent)

• Approximately 50% of all surety companies will not bond roofing contractors.
• Only 10 to 20 percent of all roofing contractors can qualify for a performance bond.
• Pertaining to bondable roofing contractors:

Less than 10% are insured by an “A” rated Surety.
About 80% are limited to $1 Million or less.
Fewer than 3% have a $20 million aggregate limit.