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General Liability Insurance

There are a lot of risks involved when you install spray foam. Spray Foam General Liability Insurance is basic broad insurance policy that protects you business and those around you. This policy protects other people (third parties) from bodily injury or property damage as a result of your business operations. Basically if you hurt someone or damage their property that is what is covered by this policy. Overspray is a common item to make sure that you have coverage for your spray foam business. Open Roof for most spray foam roofing companies they just go over the top of the existing roofing but some companies do have to tear off and replace some damaged underlying material. During this “open roof” situation there could be rain, sleet, or snow enter the building and damage the interior structure. This is normally excluded from most general liability insurance policies in order to keep the price down on the insurance policy.

Endorsements

Additional Insured Endorsements this is the actual mechanism that transfers risk for the customer or another contractor. This endorsement adds another entity to your insurance policy. Completed Operations this additional insured endorsement provides coverage down the road in case something happens after you finish installing the product. Ongoing Operations this is the coverage that provides better coverage during the course of installation. Primary Wording this endorsement makes your general liability insurance pay first in the event of a claim. Primary wording is used on larger commercial and industrial jobs. Sometimes new home general contractors require this also. Primary Wording this endorsement makes your general liability insurance pay first in the event of a claim. Primary wording is used on larger commercial and industrial jobs. Sometimes new home general contractors require this also. Waiver of Subrogation this endorsement waives the right to subrogate for the insurance company. Subrogation is one of the basic tenets of insurance and just meams that the responsible party pays. A waiver of subrogation means that your insurance company is prevented from recouping their claim payouts from the responsible party. An example of this would be if you are sued as a result of your customer or another contractor. If you have a waiver of subrogation your insurance company would just defend you in court. If you do not have a waiver and you are sued as a result of another company then your insurance company would seek to recoup their defense costs for the claim.

Exclusions

It is very important to review your insurance policy and make sure there are no exclusions mentioned on the policy that you might need covered in the event of a claim. Many clients assume that they bought insurance and they are covered but operations change year after year and so do insurance policies. I have seen policies that exclude coverage for spray foam insulation written through a loop hole under the broad category of insulation. The carrier might issue a policy but there is no coverage through the general liability policy. I have seen roofing policies that exclude coverage for roof coatings like elastomeric or silicone. It is very important to work with an insurance agent that understands the work that you perform. Some common items not covered by spray foam general liability insurance include Pollution Liability, Injured Employees, Vehicles Licensed for Road Use, and Tools & Equipment. There are other types of insurance policies that cover these risks.
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Surety Bonds

One of the products and services we at The Contractors Choice Agency, Inc. is surety bonds. Surety bonds are very common in construction. Some spray foam contractors need just one license bond and thats it. Other spray foam contractors never even need one. Some states don't have a lot of bond requirements. Others require a bond for each city or parish you go into.

Why is bonding important?

The reason bonding is important is two reasons. First you may need a bond to legally operate in your state, city, parish or other municipality. If you can't get a bond you might not be able to advertise or solicit work. Second large commercial contracts require performance bonds. If you are trying to take your business to the next level, and go from six figures to seven, or eight, you need to get bonded. I recently did 10 performance bonds for a roofing contractor down in Texas for 10 insurance restoration jobs because of Hurricane Harvey. They were the only company able to get bonded. The property insurance company had to require a bond because the projects were large churches and the proceeds were from insurance claims. I personally wrote $4,800,000 in performance bonds in 2017. I have also written hundreds of license and permit bonds for small amounts $5,000-$25,000.

What is a bond?

It's a third party guarantee!

A bond is a pledge by the surety to another party (the obligee) that a third party (obligor/contractor) will faithfully perform its obligations in a contract between the obligee and obligor. It’s basically an insurance product that is used to guarantee something. Bonds provide legal and financial guarantees. Bonds can be used to guarantee that a contractor will complete a job (performance bond), follow local licensing laws and building codes (license bond), pay a supplier (supplier bond), or complete a job that was permitted (permit bond). If the obligor(contractor) fails to complete its work or defaults, the surety will evaluate the situation and either step in to complete the project or pay out the obligee’s extra costs to get the work complete up to the limit of the bond (penal sum). Once a bond payout occurs the surety seeks to immediately recoup their payouts. Bonds are normally based off the individual credit score and bond history however smaller license/permit bonds for $5,000-$20,000 are normally instantly approved for everyone because of the amount of money/capital in the markets right now. License bonds run $50-200 and can be distributed electronically via fax or email to the contractor who in turn executes the bond by signing it and providing to the obligee. License bonds are common in cities, counties, and states. Performance bonds are normally used on larger contracts and cost 1-5% of the total amount of the contract. Because performance bonds involve larger guarantees these bonds always check personal credit. If you do not have good credit then you might not get approved or the rate will be much higher. It is good to work on your credit with your bond rep before applying for a bond. It is a good idea to get preapproved for bonding so you know what amount you can get bonded for and how much it would cost you to get the bond. This is where having an established relationship with a surety bond expert will help you.

Why is getting Pre-Approved important?

Imagine if you needed a performance bond at the last minute and the last minute surety company told you yeah we can do it but its 3.5% but your competition got preapproved for bonding prior to even learning about the project and had found a company to bond them a 1%. Just the spread on your bond costs could be a hidden competitive advantage in your competitions favor. Don't allow your competition to get ahead. Get bonded now.

How do you get bonded?

It is important to get started early. Get preapproved by your surety company so when that big $1,000,000+ job is requiring you to get a bond-you already have the performance bond ready to go. If you want to make it big in commercial roofing you need to have bond capacity or the ability to have multiple bonded jobs going on at the same time. One of my biggest clients needs $15,000,000 in bonding at a time. It requires him to provide bank statements, tax returns, business financials, and other items in order to have a rolling bond capacity. Having your financials up to date will help your bond application process quickly. Cleaning up your personal credit is important. I love seeing how big a difference I can make in your score. Sometimes little things like a collection or unpaid ticket weigh your score down. Removing those black marks from your record can be tricky but it will save you money and make approval a lot easier. Please let me know if you would like to get preapproved for bonding. Josh Cotner, CRIS 480-381-8949 josh@contractorschoiceagency.com
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Umbrella/Excess Policy

If you need an spray foam umbrella insurance policy we can write it. We need to coordinate your underlying coverages in order to place an umbrella policy so please have those ready for us to review with you.

Info/Quote Request

If you would like more information please call 800.918.3584 or click Request Info for a quote.