Workers Compensation Insurance
Every state requires an employer to secure a policy of workers compensation to provide for an injured employee the benefits of the workers compensation law of that state. An insurance company that has had extensive experience in the workers compensation field is best suited to meet the requirements of most contractors. It is in the employers, as well as the employees, best interests to see that the company entrusted to provide workers compensation insurance is equipped to provide loss-prevention service and prompt first aid and to settle compensation claims fairly and speedily.
Some states impose on contractors liability for injury to subcontractors and their employees unless insurance is specifically provided for subcontractors and their employees. Check the law of the state in which construction is to be performed.
Subcontractors insurance should be carefully examined and deficiencies found should be corrected. Certificates of insurance should be required, including coverage for contractual liability (hold-harmless). Because many complex situations arise, it is important that the advice of a qualified agent or broker be obtained.
An injured employee may believe that it is advantageous to waive workers benefits and sue the employer for negligence or failure to maintain a safe place to work. Since benefits under workers compensation are limited by statute, the employee may believe that recovery in a lawsuit may be substantially higher. Insurance coverage for such suits is provided by Employers Liability Insurance.
Money and Securities Protection
Every contractor has cash, securities, a checking account, and payrolls that are vulnerable to attack by dishonest people, both on and off the payroll. The same hazards present in every business are present also in the construction business. And no contractor is immune to dishonesty, robbery of payroll, burglary of materials, or forgery of signature on check.
Employee dishonesty may be covered on a blanket basis, either under a Primary Commercial or Blanket Position Form of Bond. The fact that contractors generally entrust the maintence of payroll records and the payment of employees to subordinates demonstrates the necessity for blanket dishonesty protection.
While many contractors maintain an organization on a year-round basis, some may not. For those contractors who do have a permanent staff, the bond may be written on a 3-year basis at a saving. It is important that adequate limits be purchased.
A blanket bond in an amount equal to 5% of the gross sales is desirable.
General funds, securities, and payroll funds should be covered on the broadest basis available that protects against burglary, robbery, mysterious disappearance, and destruction, on and away from any premises. The general funds may be covered in an amount sufficient to protect against the maximum single exposure. Payroll funds may be insured specifically and in a different amount.
Contractors who maintain inventories of materials should insure them against burglary and theft. It should be noted, however, that insurance companies are not willing to insure against loss by burglary or theft unless materials are under adequate protection. Insurance is not available to cover property on open sites or in yards, but only while within buildings that are completely secured when not open for business.
Every business that maintains a checking account, however small the balance may be, should insure against loss caused by the forgery of the makers name or by the forgery of an endorsement of checks issued.
The policy to cover all these hazards is the Comprehensive Dishonesty, Disappearance, and Destruction Policy. Its several insuring agreements include employeedishonesty coverage, broad-form money and securities protection, on and off the
premises, and forgery. Other coverages to provide burglary and theft protection for merchandise and materials may be added by endorsement. Optional coverages available are numerous, and the contract may be designed specifically for all of a contractors exposures.
