Masonry Magazine September 1965 Page. 13
Special Report:
On a subject matter of vital concern to every responsible mason contractor
INSURANCE FOR CONTRACTORS
By Walter T. Derk, Fred S. James & Co.
The Mason Contractors Association of America has been pleased to present this Special Report on "Insurance For Contractors." It is a comprehensive guide to liability exposures common to the Construction Industry and the Insurance coverages available to protect against them.
Part VIII
"WRAP-UP" INSURANCE CONTRACTS
Many contractors have already encountered contract specifications calling for submission of their bids excluding insurance costs, particularly where a single large project is involved. In this case, the owner or general contractor arranged for all insurance coverage with the possible exception of Workmen's Compensation.
This approach usually benefits the owner by reducing overall insurance costs through mass purchasing and the elimination of expensive Hold Harmless Agreements between the general contractor, owner and subcontractors. This kind of program also greatly simplifies the task of reviewing insurance policies and certificates otherwise submitted through a great many sources. In most cases, claim settlement, first aid and audit procedures can be performed more efficiently. General contractors contemplating work which is confined to a single location, or otherwise lends itself to package treatment by reason of the work to be performed, should consider "wrap-up" coverage as a means of reducing costs. While the total contract cost for the project should be in the area of $15,000,000 to $20,000,000 or more for inclusion of Workmen's Compensation Coverage, there is no specific minimum area as respects Liability Insurance, which in itself can account for a great deal of premium. Coverage may be written either on a Guaranteed Cost or Retrospective basis.
Subcontractors working under specifications which call for excluding specific coverages purchased by the owner or general contractor should make it a point to have those specifications carefully analyzed by their insurance representative. The subcontractors' policies should then be endorsed to specifically exclude those coverages to avoid duplication and eliminate such payroll or contract cost from premiums developed at final audit. Care should be taken, however, to avoid elimination of coverage which is not mentioned in the "wrap-up" program, but which is part of the subcontractors usual insurance program, Products Completed Coverage, for example.
JOINT VENTURES
Joint ventures, wherein two or more contractors team up to perform a specific job, call for specialized treatment in establishing a proper insurance program.
Some of the rating and policywriting methods discussed earlier still apply, but others are disregarded in consideration of the particular exposures involved. In this case, the insurance carrier weighs the relative exposures.
This material is copyrighted by Walter T. Derk, 1963, and can not be reproduced in any manner without the written permission by both Mr. Derk and the MCAA.