If you are a seasonal contractor, such as a roofer or a landscaper, the summer months are the peak of your busy season. Now that fall has arrived, you’re probably trying to work as much as possible, knowing that in a few short weeks you’ll shut down for another season or the number of jobs will be radically reduced.
If you’ve been in business for a while, you may know that it’s very difficult to buy insurance for your business for a few months out of the year as most companies insist on selling you an annual policy. This might seem unnecessary given that you aren’t operating your business over the winter. However, an annual policy actually provides some very important protection for you.
If your insurance policy is covering any business property such as tools or equipment, it’s important to maintain this coverage year-round. Even though your tools might be kept at home or in a storage unit over the winter, they could still be lost or damaged due to fire, theft, water damage and/or more.
Products & Completed Operations Liability.
The Commercial General Liability portion of your business insurance policy should include coverage for ‘Products & Completed Operations Liability’. Let’s look at an example. Say you complete a project in August and cancel your insurance policy in October. In November, someone is hurt as a result of the work you did on that project in August. Since the injury occurred in November, after you had cancelled your policy (including your coverage for completed operations), you would have no coverage against a claim of bodily injury. Furthermore, many contracts require that the contractor carry continuous completed operations liability insurance for a certain period after a job is completed (usually 12-24 months).
Premium & Payment Implications.
Insurance companies don’t like to see a pattern of buying and cancelling insurance policies. Since you need to disclose your insurance history when applying for a new policy, they will recognize lapses in coverage and may require you to pay a higher price, and/or pay your full premium up front and make it fully retained, which means that no refund would occur in the event of cancellation, regardless of the reason. Keep in mind that they are charging you a premium heavily based on your type of operations and your estimated revenue, not the number of months you are operating for. Also, keeping continuous coverage will allow you to pick up a job over the winter if the opportunity presents itself, without having to worry about arranging insurance coverage.
If you have any questions regarding the information above or if you would like to discuss your current policy with a broker, our Bullfrog Insurance brokers would be happy to help you out!