checklist - contractors exposure checklist - insurance...

Insurance ChecklistContractors’ Exposure Survey

The Contractors’ Exposure Survey is a guideline for obtaining and using informa�on regarding a contractor for risk and insurance solu�ons. The survey is designed to be used by agent-brokers; wholesalers, underwriters or a business owner.

The very nature of construc�on related businesses is complex and varied. Many agent-brokers have only a few contractors as customers while others concentrate in this area of business. The risks associated with and the insurance coverages used to transfer those risks is as complex and difficult as any class of business. To be able to analyze the contractor’s insurance program it is necessarily to thoroughly understand the exact nature of the contractor’s business. To that end, this is the first of several survey forms that will provide the tools for in-surance professionals to perform proper risk analysis for the contrac�ng risk and design appropriate insurance solu�ons. There are three parts to conduc�ng a review of the contractor client exposures.

First: The risk exposures must be iden�fied

Second: Understand what the exposures mean

Third: Iden�fy available insurance solu�ons

The following survey outlines the informa�on needed to understand the account and what to do with that informa�on. There may be other items of informa�on for a specific account that would necessitate addi�onal review.

Step #1 Exposure Review

This exposure review sec�on is designed to assist in the compila�on of basic informa�on about the client. It is important that the insurance professional understand the business of construc�on as well as the specifics of the contractor client’s business.

Step # 2 Understand the iden�fied risk exposures

This sec�on will address the impact of the informa�on within the context of the contractor client.

Step # 3 Iden�fy the insurance coverages available to respond to iden�fied riskThis sec�on will indicate possible insurance solu�ons for the risk(s) iden�fied.

Copyright © 2010 Insurance Community Center - Materials created by Laurie Infan�no - www.InsuranceCommunityCenter.com


Contractor’s General Informa�on SurveyReview Date:

Current Company Name(s):

Past Company Name(s):

Using A Fic��ous Business Name (DBA): Yes [ ] No [ ] If yes, list:

Year Business Started: _____State of Domicile: _______ Federal Tax ID #:____________

Premises Address:

Mailing Address:

Website address:

Contact Name:

Phone: Fax: Email:

1. Iden�fy All Present And Past Companies (En��es) Exposures1. All current and past en��es could have an exposure to li�ga�on or could s�ll be involved in property ownership.

2. All en��es should assign insurance purchase, nego�a�on and changes to the en�ty shown as the First Named Insured. Receive this from the insured in wri�ng, if possible.

3. It is important to review the website to iden�fy exposures and verify the insured’s informa�on.

Present and Past Company Insurance Solu�ons1. This could be important for several different types of insurance coverages: a. Owned Property insurance such as building insurance; personal property; and equipment b. General Liability Coverage and Business Auto Coverage c. D & O Coverage and other forms of Professional Liability d. Workers’ Compensa�on coverage is an excep�on which covers the employer(s) of record. 2. Since most policies restrict the ability to request policy changes to the First Named Insured, it is important to know the person that is authorized to make changes for a corporate en�ty.

3. The insured may need Internet coverages.



Company and Ownership Informa�onD & B Ra�ng: SIC Code(s)

Iden�fy All Company Owners: Company Posi�on % of Ownership

Corporate IndemnityYes [ ] No [ ]

Buy / Sell AgreementYes [ ] No [ ]

Funded By Life InsuranceYes [ ] No [ ]

2. Company and Ownership Exposures1. Year business began is a basic ques�on on most insurance applica�ons.2. The informa�on regarding ownership is important for several types of insurance (WC) as well as surety bonds.

Company and Ownership Insurance Solu�ons1. The Workers’ Compensa�on insurance company will need the Federal Tax ID#.

2. The D & B ra�ng will be useful for a number of insurance companies as well as any surety needs.

3. The SIC code will be needed for several different insurance coverages as well as helpful in iden�fying the class of business.

4. Corporate indemnifica�on is an important considera�on for Directors and Officers Liability coverage.

5. In the event of a Partnership, Joint Venture, LLC or closely held Corpora�on, perpetuity of the company is an important considera�on to manage that risk.

6. Life insurance may be used as funding of the perpetua�on plan.



License and Personnel Informa�onResponsible Managing Employee: Yes [ ] No [ ] Name:

Contractor’s License Type(s): ____________________________________________________________

Contractor’s License #(s):________________________________________________________________

State: _______________________________________________________________________________

List All Key Personnel (Management and job site):

Name Posi�on Years of Experience Years With Insured

List Any Personnel With Professional Du�es: (Architect, Design, Engineer, Project Manager, Risk Manager)

Name Posi�on Years of Experience Years With Insured

Union Employees [ ] Union Subs [ ] Prevailing Wage Employer [ ]

3. License Exposures1. The RME is the person that carries the license by which the business operates.

2. Iden�fying the type of contractor’s license held will assist in properly classifying insurance opera�ons.

3. Personnel that provide professional du�es expose the company to suits covered under a variety of Professional Liability insurance.

4. Union employers have substan�al compliance factors with the union.



License Insurance Solu�ons1. The RME name and license number is important for the Contractor’s License Bond.2. Corporate indemnifica�on is an important considera�on for Directors and Officers Liability coverage.3. Iden�fy professional exposures and provide coverage quota�ons to respond to that risk. Architects & Engineers Professional Liability, Project Management E & O are a couple of examples.4. Include Wage and Hour coverage on the Employment Prac�ces Liability Insurance. Fiduciary Liability insurance will need to be offered to the insured.

Financial, Accoun�ng and Surety Informa�onIf reques�ng a Surety Bond or Bond line, does the company have an agreement for Surety Indemnity from all principles and their legal spouses? Yes [ ] No [ ]

Is bonding required of Subcontractors? Yes [ ] No [ ]

Have any en��es or principles filed bankruptcy in the last ten years? Yes [ ] No [ ] If yes, iden�fy party: ________________________________________________________________________

Any en��es or principles involved in any li�ga�on? Yes [ ] No [ ] If yes, iden�fy party and circumstanc-es: ________________________________________________________________

CPA on staff? Yes [ ] No [ ] Accountant on staff? Yes [ ] No [ ]

Name and Address of Outside CPA:__________________________________________________________________________________________________________________

Financial Statement Basis: Compila�on [ ] Review [ ] CPA Audit [ ]

Financial Statements Prepared: Annually [ ] Semi-annually [ ] Quarterly [ ] Monthly [ ]

GAAP Standards Used by Public Accountant: Yes [ ] No [ ]

Job Cost Records Kept: Yes [ ] No [ ] Reviewed and updated frequently Yes [ ] No [ ]

Name and Address of Bank: ________________________________________________________________Banker Name:________________________________________________________________

Phone: Fax: Email:

In compliance with Sarbanes-Oxley Act and SEC regula�ons Yes [ ] No [ ]



Prior Bond Company (ies) ________________________________________________________________

Established Bond Line:

Bond Company Bond Line Maximum

Contracts Reviewed by A�orney [ ]

4. Surety Bonding and Financial Exposures1. Indemnifica�on from the principals and spouses means that the company owners and spouses must be able to protect a surety from expenses, regardless of the type of en�ty created for the business.2. Principals or companies that are or have been involved in li�ga�on can be exposed to significant expense that can impact the ability to structure a bond line for the company.3. The use of a CPA, whether on staff or not, will assist in the proper presenta�on of financial informa�on regarding the bond line.4. Compliance with GAAP means that the accoun�ng methods to iden�fy income, expenses, assets and debt follow Generally Acceptable Accoun�ng Procedures.5. Same as above for compliance with records and disclosure statutes and regula�ons put in place with the passage of Sarbanes-Oxley Act.6. If contracts are not reviewed by an a�orney, advise the insured that it is in their best interest to have an a�orney review their contracts before providing to customers or signing a contract provided to them.

Surety Bonding and Financial Insurance Solu�ons1. All principals and their legal spouses will be required to disclose personal financial informa�on and agree to pay in the event of a bond default.2. The financial statement basis required for a contractor’s performance bond will be a compila�on form of iden�fying income, expenses, assets and debt.3. Prior bond informa�on is helpful in obtaining a replacement or increased bond line.

General Business Opera�ons

Commercial % of Opera�ons _______ Residen�al % of Opera�ons ______

Owner/Developer % of Opera�ons _______ General Contractor % of Opera�ons _______

Design / Build % of Opera�ons _______ Project Manager % of Opera�ons _______

New Construc�on % of Opera�ons _______ Remodel % of Opera�ons _______

Apartment Building % of Opera�ons ______ Condominiums % of Opera�ons ______

Private Jobs % of Opera�ons ______ Public Works % of Opera�ons ______Federal [ ] State [ ] Local [ ]



CCIP % of Opera�ons ______ OCIP % of Opera�ons ______

Airport Work [ ] Apartments or Townhouses [ ]

Below Grade Work (below 2 Feet) [ ] Condominium Construc�on [ ]

Crane or hoist use Custom Private Homes [ ]

Docks, piers, wharves [ ] Electrical or Co-Genera�on Power Plants [ ]

Nuclear Power Plants [ ] Off shore [ ] If yes, distance from shore_______

Oil or Gas Refineries [ ] Pile Driving [ ]

Retro-Fi�ng [ ] Shoring or underpinning work [ ]

Street Construc�on [ ] Swimming Pools [ ]

Work above 3 stories from grade [ ] Work performed on, over or near railroads or tracks

Any Other Type of Business (Non-Contrac�ng):_____________________________________________

Wri�en Contracts With Owners [ ]

Geographic Areas of Opera�ons (Show payroll by State and/or Country)

Payroll State / Country

5. General Business Opera�ons Exposures1. Design-Build contractors have a design team on staff, including architects or engineers.2. Project management means that the contractor is not performing the work, but is supervising and managing the project.3. Remodel work - The insured may be exposed to claims for causing damage to property of others in their care, custody or control.4. Conversion of apartments to condominiums, mul�-family residen�al and tract home is o�en difficult opera�ons to insure for General Liability coverage. 5. A public works job will o�en require at least a bid and/or performance bond prior to project start.6. The use of cranes or booms in construc�on opera�ons can leave the contractor responsible for property in their care, custody or control. Verify that the insured has a job site crane / hoist supervisor to ensure proper usage and that weight loads are not exceeded.7. Working on docks, piers, wharves or offshore exposes the insured to addi�onal risk for both liability as well as Federal Workers’ Compensa�on laws.8. General Liability Policies as well as Excess Liability Policies exclude any loss involving nuclear plants.9. Work performed at oil or gas refineries increase the normal risks of pollu�on and explosion loss.10. Work performed on, over or near railroad tracks could result in the railroad company requiring indemnifica�on as well as certain insurance coverages put in place for them.



General Business Opera�ons Insurance Solu�ons1. Design build opera�ons will require Professional Liability Coverage for the risks of improper design.2. Project management opera�ons will require Professional Liability Coverage for the risks of management of the project.3. The CGL includes an exclusion for property damage to personal property in the care, custody or control of the insured. A�empt to modify the exclusion or advise insured in wri�ng of this exclusion.4. Check General Liability Policy for residen�al opera�ons exclusions. If insured uses sub-contractors, this could be a significant exposure excluded on the sub’s policy. This would remove coverage for your insured under the sub’s policy for contractual liability or as Addi�onal Insured.5. Iden�fy bonding needs and work with customer ahead of the projects to provide a proper bond line.6. Use of cranes (including boom extensions) can require Rigger’s Liability to cover the personal property that is in the care, custody or control of the insured. Review the Contractor’s Equipment Policy for the limita�ons that apply to any Boom extension and rental exposure. 7. May need Marine Legal Liability (verify products-completed opera�ons coverage is included) as well as Mari�me Workers’ Compensa�on or USL&H coverage.8. If working at a nuclear power plant, verify the contractor is included on the Mutual covering the plant.9. Oil or gas refineries - Cross reference to Pollu�on Remedia�on and Legal Liability Coverage as well as Workers’ Compensa�on loss control.10. Work performed on, over or near railroads or tracks - Will likely need to provide Railroad Protec�ve Liability for the benefit of the railroad. The “insured contract” language in the CGL, BAP and Umbrella / Excess Liability policies generally remove coverage for the insured’s assuming the responsibility to indemnify the railroad. The insured’s a�orney should review their obliga�ons to any owner, developer or the railroad company. The railroad may also require Federal Employee Labor Act coverage endorsed to the contractor’s policy. Occasionally the railroad company will also require to be listed as an alternate employer on the contractor’s policy.

Inden�fy Type of Work PerformedAlarm Installa�on, Ser-vice and Repair [ ]

Appliance & Accessories Installa�on [ ]

Blas�ng [ ] Boiler Installa�on and Maintenance [ ]

Bridges [ ] Cabinet Installers [ ] Cabinet Maker [ ] Carpet Installa�on [ ]

Carpentry – Finish [ ] Carpentry – Rough [ ] Carpentry – NOC [ ] Concrete [ ]

Dams [ ] Demoli�on[ ] Door/Window Installa�on(Under 3 Stories) [ ]

Door/Window Installa�on(Over 3 Stories) [ ]

Drilling [ ] Driveway / Sidewalk Pav-ing and Repair [ ]

Drywall / Wallboard Installa�on[ ]

Electrical [ ]

Elevator[ ] Engineering [ ] Excava�on [ ] Fencing [ ]



Finish Carpentry [ ] Fire Suppression Systems [ ]

Fireplace Const [ ] Floor Refinishers

Flooring installa�on [ ] Framing [ ] Garage Door Install [ ] Grading [ ]

Highway/Heavy [ ] HVAC[ ] Insula�on Installa�on[ ] Interior Decora�ng[ ]

Janitorial[ ] Landscape [ ] Masonry [ ] Mechanical [ ]

Pain�ng (no spray) [ ] Pain�ng (Spray) [ ] Paperhanging [ ] Paving [ ]

Plastering – Exterior / Stucco [ ]

Plastering Interior Only[ ]

Plumbing [ ] Remedia�on [ ]Type:_______________

Roofing [ ]Type:

Sandblas�ng [ ] ScaffoldingErec�on [ ]

ScaffoldingFabrica�on [ ]

Seismic Retrofit [ ] Sep�c Tank Installa�on [ ]

Sewer/Water (Bldng) [ ] Sewer/Water (Street) [ ]

Sheet Metal [ ] Siding Installa�on [ ] Sprinkler – Landscape [ ]

Sprinkler – Interior [ ]

Steel Erec�on [ ] Steel Fabrica�on [ ] Steel Ornamental Fabrica�on / Erec�on [ ]

Street / Road [ ]

Swimming Pool Contractors [ ]

Tank Installa�on [ ] Tunnels [ ]

Other (Describe):

6. Type of Work Performed Exposures1. Bridge and dam building involve poten�al for enormous catastrophic loss if the structure fails post-comple�on. Many state statutes regarding construc�on only restrict the �me period to sue for property damage to the project itself. Depending on the loca�on, this may expose employer to Federal Workers’Compensa�on statutes.2. Demoli�on or blas�ng opera�ons imposes absolute liability upon the contractors. Verify safety standards and supervisor experience. How are explosives stored? Above ground? Below ground? What is the protec�on of those facili�es?3. Exterior paint can create overspray and result in property damage to nearby buildings or vehicles.4. Contractors can construct their own scaffolding. This becomes a product and the employer is subject to li�ga�on from employees injured by scaffolding collapse.5. Depending on the ul�mate contents of a tank, the insured is vulnerable to product liability claims as a result of a tank leaking a�er installa�on.



Type of Work Performed Insurance Solu�ons1. Many of these projects may be wri�en on an Owner Controlled Insurance Program. It is cri�cal that the completed opera�ons coverage be provided for long term following the comple�on of the project. The injury or damage to others is not typically restricted by those statutes. Both areas may involve addi�onal Federal Workers’ Compensa�on coverage.2. Review General Liability Policy for warran�es or restric�ons if the contractor is involved in demoli�on opera�ons.3. Underwriters will o�en use a deduc�ble per claim/occurrence. Verify with underwriter that the pollu�on exclusion will not apply to these claims.4. If building scaffolding, provide offer of a high Employer’s Liability limit5. The General Liability Policy is o�en issued with a separate total pollu�on exclusion. One of the coverages removed is product liability claims that arise out of contamina�on. Offer Pollu�on Legal Liability that includes coverage for product related claims.

Subcontractor and Contract Review Informa�on and Issues

Total % of Work Sub-Contracted: ____Types of Subcontractors Used:_____________________________________________________________

Wri�en contracts with all subs Yes [ ] No [ ]

Are Cer�ficates of Liability Insurance required prior to job start? Yes [ ] No [ ] Coverage lines required: General Liability [ ] Workers Compensa�on [ ] Business Auto [ ] Excess Liability [ ]

Does the insured require to be added as Addi�onal Insured to the Subcontractor’s General Liability Insurance: Yes [ ] No [ ]

List Main Subcontractors Used Regularly:

Name Address Trade Descrip�on

7. Subcontractor and Contract Exposures1. Does the contractor have a hold harmless and indemnity clause in the contract? If so, check to verify the type of indemnity agreement. The clauses should be favorable to the insured and in compliance with applicable statutes. Review with the insured’s a�orney.2. Are all subcontractors required to have liability insurance equal to the insured’s limits of liability?3. Require subcontractor’s insurance to be primary and not require contribu�on.4. Does the contract require that a waiver of subroga�on be provided in the General Liability policy? The Business Auto policy? The Workers’ Compensa�on policy? Yes [ ] No [ ]



Subcontractor and Contract Insurance Solu�ons1. The General Liability underwriter may add an endorsement that limits contractual liability to losses that have been caused in whole or in part by the Named Insured. 2. Check the insured’s General Liability policy for any warranty regarding limits. Some insurance policies will void the insured’s own coverage if the subcontractor does not maintain limits equal to the insured’s. If so, advise insured in wri�ng as part of the proposal and obtain a dated signature.3. The Cer�ficate of Insurance should have the endorsement a�ached, not just stated on the Cer�ficate.4. While the standard General Liability and Business Auto policies allow the insured to waive subroga�on prior to a loss, never assume that is included. The Workers’ Compensa�on policy does not allow the insured to waive subroga�on rights and the policy will need to be endorsed for a fee.

List Major Suppliers Used Regularly:Name Address Contract Informa�on

List Architects / Engineers Used Regularly:Name Address Contract Informa�on

Business Earnings, Payroll and Subcontractor Costs:Year Total Gross Receipts: Payroll: Contract Costs:

Es�mated Next 12 Months

Prior Year Actual

2 Years Prior Actual

3 Years Prior Actual

Total Number of Employees: ________________________Job site only ________________ Office only _____________

Last Five Largest Projects:Project Name Cost Comple�on Date Bonded (Y or N)



Safety Prac�cesMachine guards in place [ ] Safety goggles mandatory [ ] Steel-toed boots mandatory [ ]

Ear plugs mandatory [ ] Gloves mandatory [ ] SB198 program compliance [ ]

Safety mee�ngs held regularly [ ] Accident inves�ga�on procedures [ ]

Employee motor vehicle records required [ ]

Shop area clean [ ] AQMD compliance [ ] Employment prac�ces procedures compliant and adhered to [ ]

Equipment maintenance program [ ]

Mechanics (journeymen) [ ] Tool, equipment and vehicle training program [ ]

Pre-employment physicals [ ] Pre-employment Driving Record [ ]

Pre-employment drug and alcohol screening [ ]

Descrip�on of Losses in Past Five Years – General Liability and/or Excess Liability – or at-tach detailed loss runsYear Loss Details Disposi�on

Descrip�on of Losses in Past Five Years – Workers Compensa�on – or a�ach detailed loss runs last 5 years

Year Loss Details Disposi�on

Descrip�on of Losses in Past Five Years – Property, Builder’s Risk, Equipment, Autos

Year Loss Details Disposi�on



Insurance Cancelled or Non-RenewedYes [ ] No [ ]

Explain:

Safety Prac�cesAddress_______________________________________________________ Owned: [ ] Rented: [ ]

Rented To Others: [ ]

City_________________________ State_____ Zip Code________________

Address_______________________________________________________ Owned: [ ] Rented: [ ] Rented To Others: [ ]

City_________________________ State_____ Zip Code________________


checklist - contractors exposure checklist - insurance...

Documents