Construction Insurance Issues

aquasport17 · 07-12-2011, 12:27 PM

I am building in Vermont and working with a friend of mine who is a construction business owner and contractor. He will be doing the excavation, foundation, and framing and I am doing some of the work myself such as plumbing, electrical, and finish carpentry.

I am planning to work with a local Vermont bank through a typical construction loan, but I am not a licensed plumber or electrician. The bank requires me to be a subcontractor under the general contractor, which is fine with him.

The issue becomes liability insurance (I have my own health insurance).

Bank documents state "The General Contractor agrees to be responsible for collecting Certificates of Insurance for all Sub-Contractors".

Can I get some sort of liability insurance coverage for my work so that I can offload this responsibility from the GC and cover my dwelling? I don't even know where to look for something like that.

Thanks,

Jeff

md2lgyk · 07-12-2011, 01:59 PM

Well, I'd start with my insurance agent.

AGWhitehouse · 07-12-2011, 02:08 PM

It's gonna be tough to get insurance for electrical and plumbing work without a license. My suggestion would be to become an "employee" of your friend so you are covered under his insurance umbrella. You will be able to do "GC" type work (aka snaking wire, hanging boxes, drilling framing, running pipe, etc.). For the final connections (electrical panels, etc.) you call in a licensed/insured professional for a day. Yeah it's a little extra $, but legally you're covered.

You may want to discuss your overall homeowner's policy with your agent to ensure you're covered (personally) from any possible problems that could arise that fall outside of the GC's responsibility.

aquasport17 · 07-12-2011, 02:09 PM

Quote:

Originally Posted by md2lgyk

Well, I'd start with my insurance agent.

It's new construction. There is no insurance agent. There won't be a typical policy on the dwelling until the occupancy permit is granted. That's the whole case in point.

aquasport17 · 07-12-2011, 02:18 PM

One more point ... The town in Vermont where I am building does not require permits for anything but wastewater/septic and general building permit.

AGWhitehouse · 07-12-2011, 02:21 PM

Quote:

Originally Posted by aquasport17

It's new construction. There is no insurance agent. There won't be a typical policy on the dwelling until the occupancy permit is granted. That's the whole case in point.

I think he means any insurance agent of your choice. You can get insurance for anything if you're willing to pay for it. If you have an agent you already know/use (auto insurance?) give him a call and pick his brain about options and coverages.

DangerMouse · 07-12-2011, 02:45 PM

Quote:

Originally Posted by AGWhitehouse

For the final connections (electrical panels, etc.) you call in a licensed/insured professional for a day.

I wired my own home and passed the rough-in and final inspection easily. As long as you know what you're doing and it's allowed in your area, it's the cheapest way to go. If you have questions along the way, this is the best place to get answers! The inspector was impressed with my work and gave me an "Attaboy" on the final too!

DM

AGWhitehouse · 07-12-2011, 03:15 PM

Quote:

Originally Posted by DangerMouse

I wired my own home and passed the rough-in and final inspection easily. As long as you know what you're doing and it's allowed in your area, it's the cheapest way to go. If you have questions along the way, this is the best place to get answers! The inspector was impressed with my work and gave me an "Attaboy" on the final too!

DM

It's awesome that there are still areas where you can do it all yourself.

In CT, DIY final connections are a no no for permitted work. For non-permitted work, well...I've done it...but ssshh...

Daniel Holzman · 07-12-2011, 04:30 PM

I assume you are referring to liability insurance in the event you damage something, i.e. run into the house with your car. The bank probably assumes (correctly) the the GC is going to require all subcontractors to have that type of insurance, as well as medical insurance to cover you falling off the house and injuring yourself. Since it is your house, you should have homeowners insurance on it, which would cover you for losses during construction that are outside the scope of the contractor's insurance, for example a wind storm damages the house during construction. Contractor insurance is not going to carry that, so you need to.

You should be able to get a rider on the homeowner's insurance to cover you, but as stated, talk to your insurance agent, they will know how to handle it.

md2lgyk · 07-12-2011, 05:49 PM

Quote:

Originally Posted by aquasport17

It's new construction. There is no insurance agent. There won't be a typical policy on the dwelling until the occupancy permit is granted. That's the whole case in point.

I understand. I built my own house myself. What you want is called builder's risk insurance. It 's actually cheaper than homeowner's insurance because there's no coverage for contents.

Ron6519 · 07-12-2011, 06:46 PM

Quote:

Originally Posted by aquasport17

It's new construction. There is no insurance agent. There won't be a typical policy on the dwelling until the occupancy permit is granted. That's the whole case in point.

What you fail to understand is that you need to speak to an insurance agent to see if anyone will even cover you. To be a contractor, you need insurance. Actually you need the plural. Liability, disability and maybe, Workman's Compensation.
Many times, the permit process will dictate the insurance. In your case the bank will take over that reponsibility. They want to know who will pay for screw ups in the construction process and protect their investment. If you're not insurable, they won't give you any money.