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Semi Perpetual insurance1/8
I have a new situation, We took on a new contractor (to us). at this point we have completed say seven jobs, all successful with no to little punch and timely delivery, Both the contractor and we are enjoying the growth. Te supervisors are as professional as the project managers and we look for this in our prefer'd contractors.
Recently we renewed all Insurance policies and sent out updates to all current work in process or still under retainage. Soon after i get an email to re-insure all past completed work (Done, long gone, warranty completed) from this one contractor, I must admit i did not catch the ramifications of a clause portion which states
"XXXXXX Builders and Owner shall be named as additional insureds on a primary basis on all policies except Worker’s Compensation Insurance, including Comprehensive General Liability ongoing as well for completed operations. Completed operations coverage and the additional insured status of XXXXXX Builders and Owner shall be maintained for at least seven years after completion of the Work. Subcontractor waives all claims and all rights of subrogation against XXXXXXX Builders, the Owner, and affiliates of either damages caused by perils or other causes of loss to the extent covered by insurance applicable to the Work. Non-owned and hired vehicle coverage must be provided for under the Comprehensive General Liability or Automobile Insurance policy to the same limits of the overriding policy stated above. If Subcontractor has insurance coverage greater than a minimum limit required by this Section 12.0, the amount of insurance available to XXXXXX Builders and Owner as additional insureds shall be the limit of the policy, rather than the required limit, including any excess/umbrella coverage the Subcontractor may carry."
Now we have carried full insurance for over 25+ years, the part that caught my insurance companies attention was the "Additional Insureds" part, somewhere and on each job i have been told this cost (Average) 150+/- and i just say yes and ok, not the first time we have been asked to additional insured, the part that caught my attention was "seven years after completion"
in due diligence i found this may not be a requirement of the client(S) as this is there contract to the subs, other GC's we work for with the same client do not have this clause requirement beyond the warranty period. i checked the AIA standard and current Contract and it is not there either.
With certain contractors we will do all of the smaller jobs most will not even quote along with the larger, we have three we do al their work and those relationships are now 15-20 years old. (Makes for good bread and butter) we have always known this would not be the case with this contractor as A) they have operations in other States and do jobs larger than we would quote.
Here is the situation that has unfolded so far,, it will not be too long with our current load we will have done say 30 jobs with this contractor, 50% of those jobs are 15k and under, tha balance is 25 -85k without building a budget into the long term servicing of the contract required insurance the maintenance fees next year will reach an estimated 4500.00 per year if we stop taking their contracts now, and will only grow if we keep doing business with them, they have been a good client but this will offset gains in years to come.
I can live without the business, i do not want to, i can quote the larger jobs only and build in and prepay these fees. I am looking at all options. I will honor all contracts to date, I always have. I am wondering and have questioned how the smaller subs than I are being held to this contract spec as well. if it is equal across the board then i will find a way to compete,, Funny this is not even a government regulation !
My questions are Have any of you at this commercial level seen this before and how are you competitively budgeting for it ?
It is the weekend and i will be contacting the legal guys next week, i always appreciate industry experience from you guys.
Are you paying for COI or waiver of subrogation on a per project basis?
CNA and others offer polices that don't charge for the forms or WOS.
I don't think the real risk is that much greater, in the end in a major suit everyone will get dragged in, they are just making their side of it simpler.
I have has some responses from other contractors and insurance today,, the GC in question is looking into why this is so long as well.. we have always known two years sometimes three no one ever asked for the third year at this point.
one GC thought this was his contract and was unaware his was 5 years, he is changing that today all the others i asked said two.. it is the annual maintenence cost that may become a problem