This story is the continuation of Monday’s story, “Cash in on construction.” To read the first part, click here.
Adding value
There’s no doubt that insurance professionals will have the opportunity to grow their business in the construction space in 2016, but how can they go about maximizing that potential? Holly Beers, vice president and underwriting manager at RSI International, advises agents to implement an online rating tool.
“Contractors are very difficult to get a hold of,” she says, “and if a retail agent can offer them a quote quickly, they have a better opportunity to write the business. The MGA that can provide a platform that gives the retail agent a tool that is easy to use to provide quotes on contracting risks is a win-win for both the agent and the MGA in this segment of the business.
“Everyone wants everything instantly these days,” she continues, “and many prefer not to talk to anybody, so if you can provide an online rating tool that can qualify the risk quickly within the underwriting criteria you are willing to write, it will give you an advantage in our industry today.”
Another way an agent can add value to client relationships in the construction industry is by making sure clients are aware of any possible coverage gaps in their controlled insurance programs. In some cases, general contractors or project owners are encouraged to sponsor controlled insurance programs in an attempt to ensure that all subcontractors on the project are properly covered.
When offering this type of policy, an agent should work closely with the client to ensure that they’re fully aware of the policy’s coverage and limits, because if the client selects a program that shares limits, a loss suffered by another party on a project could reduce their coverage.
Giving contractor clients the peace of mind that comes with a comprehensive insurance policy will also allow any agent to stand out. Contractors need tools to get the job done – tools that are often expensive and extremely appealing to thieves. Contractors need to know that, should their tools or equipment be stolen, their policy will enable them to quickly get the new tools that will enable them to continue their daily operations.
Likewise, a contractor needs to know they have they have adequate liability coverage in place so that if they are found responsible for injuries suffered by another party or property or environmental damage, it won’t cause a financial meltdown. Agents should work with their clients to discern whether they require a general liability aspect to their policy, which will cover the cost of defending the insured against the charges alleged in a lawsuit, including attorney fees, investigation costs and other legal expenses.
Agents should also educate themselves on stricter indemnity laws that could leave their contractor clients exposed. Certain states are reducing the scope of indemnity that can be inserted into contractor’s policies. In California, contractors are prohibited from using Type 1 indemnity agreements, which offer protection for everything but sole negligence. Although these new regulations were introduced to mitigate against low-quality construction outcomes, they also leave contractors vulnerable to litigation.
In an industry like construction, where reputation is paramount to future potential earnings and growth, it’s essential for contractors to know that their coverage protects them in any such unfortunate event. For brokers, this segment of the market represents a good opportunity to build an affluent client base that’s in significant need of up-to-date, all-encompassing products. Every construction project is unique, so meeting demand for policies that cover a breadth of risk factors is essential.
