Which Policy Covers Workplace Damage (When You're at Fault)?

July 2017
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Accidents happen, no matter how much you prioritize safety on the jobsite. If you’re at fault for a workplace damage claim it can feel disastrous. There are so many questions that you need to find answers for:

  • “Which of my contractor insurance policies will cover the damage, builders risk or general liability?"
  • "What’s this accident going to cost me?”

If you’ve got plenty of contractor insurance in place, you’re most likely prepared for worst case scenarios. Like accidentally swiping a support column with the crane you’re operating and causing the roof to collapse on your recent project.

Which Contractor Policy Covers My Workplace Damage?

There’s a good chance that your project owner or general contractor has a builders risk policy in place to protect the project structures and materials while being built. And you’ve most likely got general liability insurance to cover yourself against third-party property damage.

Which one is best for this situation?

General Liability vs Builders Risk

If you ask the general contractor, he may urge you to file the claim against your general liability policy.

In this case, the property belongs to someone else and you’re at fault for damaging it. So it could be easy to see why you may immediately think you should bring this claim against your liability policy.

Many times, contractors who want to maintain a good working relationship with a project owner or general contractor may be reluctant want to file a claim against the builders risk policy.

You can call up your insurance company, file a claim, and hopefully the project owner will forget the whole thing ever happened.

But here’s something else to consider:

A Liability Claim May Be More Costly For You

If you file a claim against your liability policy, it may impact your loss ratio and premiums for future years to come. The more claims you file against your personal policy, the higher the cost of your insurance may be as you continue to grow your business.

Builders risk policies, however, are generally project specific, so a loss will stay with that policy. Your claim may not lead to higher future premiums for the project owner or general contractor.

General Liability May Not Pay

Your CGL policy may have an “other insurance” clause in place that states the policy will only pay if:

  • You’ve been found to be negligent for the incident.
  • The loss exceeds the builders risk limits.

Sure, your general liability policy is designed to cover third-party property damage. But when there’s also a builders risk policy in place, it’s worth comparing the two.

Generally, the responsibility for obtaining builders risk coverage is on the developer, project owner, or general contractor. Not only does the policy cover all of those above, but it typically covers all levels of subcontractors on a project, too.

This policy is generally obtained for the duration of the construction project and coverage ends when the project is complete.

Most builders risk policies are written on all-peril basis, meaning anything not implicitly excluded is covered. As long as your damage was accidental, and not a result of faulty workmanship (a common exclusion), the builders risk coverage is likely to cover it.

3 Steps to Follow a Workplace Damage Incident

Follow these three steps if you’re the cause of damage on a project site.

  1. Notify the project owner and all other impacted contractors immediately as soon as damage or an injury occurs.
  2. Contact your insurance provider promptly, and give notice under both the Builders risk and your CGL policy. The insurer will investigate the claim and help you understand your options.
  3. Read and understand both policies, including exclusions. If you aren’t sure what is or what isn’t covered in your policy, ask your insurance provider for clarification.

If the claim is covered under both your general liability and builders risk policy, make sure you understand the details of each policy before and tap your insurance provider to help you make the decision. In many instances, it is more beneficial for you to file against the project’s builders risk policy, but more beneficial for the project owner to file against your general liability. Is maintaining a good relationship with the project owner more important than shielding yourself from higher insurance premiums? When you have overlapping policy coverage, the choice isn’t always clear. But at least you’ve got the problem of too much insurance to choose from, rather than no coverage at all.

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