Cost for 'additional insured' status

[David Meiland]

How many of you are are looking at fees from your subs to be listed as additional insured on their policies (or, how many of your subs are paying these fees)?

I have a situation now where I need a particular sub for about $1000 worth of work, and the fee is $200. Doesn't seem worth it... obviously.

[Fredremodeler]

Re: Cost for 'additional insured' status

David,
Ask them if it's a one time fee, or charged on every project. I'm still notified and listed as additional insured from my Garage door installer and I haven't called him in 2 years, it's just part of their process. I guess it depends on the insurer.
--Fred

[Dick Seibert]

Re: Cost for 'additional insured' status

David:

it upset me a couple of years ago when they started asking me for money, then I called my broker and he said it was industry standard to reimburse the subs for listing you on their policies. It started with $100, went to $150, and now some are asking for $200. I pay it gladly because I am not insured for the work of subcontractors, and depend upon their insurance to protect me if they do anything which would bring me into a suit.

[David Meiland]

Re: Cost for 'additional insured' status

Dick, are you saying that your subs get the $200?? I was assuming either the broker got it or the insurer, or they split it.

[Steve M]

Re: Cost for 'additional insured' status

David,
I require all my subs to list me as an "additional insured" and out of about 50 only two have balked at it. None have asked me for any fee reimbursement. I carry $1Mil liability and a $1Mil umbrella which is far cheaper than a $2Mil policy. Last year my carrier said that they would no longer accept subcontractor policys under $500K during my yearly audit and they would have to list me as an "additional indured". We shop out our insurance every year and it pays.
Steve

[Scrapr]

Re: Cost for 'additional insured' status

David
Our insurer doesn't charge us anymore. Or we got a blanket $400 (or so) charge. They used to hit us for $25 or $50 ea. And a hundred or so builders that adds up. That was about 2 years ago. Then last year my broker got them to include "all you can eat" for a flat rate charge. I'm not sure if that flat rate charge was in this year renewal.
The thing that is costing this year is waiver of subrogation. I think it is about $100-150. It is getting now that if a contractor (especially a small one) asks for a waiver of subrogation I just tell them that our insurer won't do it. They usually just say Oh, OK.

[Dick Seibert]

Re: Cost for 'additional insured' status

David:

They don't charge for the old certificates of insurance, they charge us if they add us to their policies, and we have to be named on their policies as additionally insured if we want their insurance company to protect us. We need this additional coverage now since a general's insurance doesn't cover us for the work of subcontractors. I pay it for each job, because I also want my owners named, with the owners' names on the subs' policies. Otherwise, the owner will have to sue us, I'd rather give the owner the ability to go right around me and go after the sub.

[David Meiland]

Re: Cost for 'additional insured' status

Thanks for the input, gentlemen. Right now the insurance thing is my biggest annoyance. I have a sub I want to use and his levels are not high enough, so I have to persuade him to increase them. Then I may have to pay to be listed on his policy. Another sub (the guy I need $1000 worth of work from) it appears I will also have to pay to be on his.

My renewal is coming up. I'm going to see if I can get a policy that covers me for the work of subs who do not provide additional insured status. It might be cheaper in the long run. Dick, here in WA I do not appear to have the ugly difficulties that you have in CA... yet.

[David Meiland]

Re: Cost for 'additional insured' status

A quick update on this one. I met with my insurance broker about this and other issues (renewal is approaching). My carrier will allow me to subcontract work without certs from subs, but they will charge me a percentage of that work as a premium for assuming the liability. For the small excavation and roofing jobs I need done it is on the order of 5%. The broker says there is absolutely no problem created by doing this, i.e. my carrier will not frown on me and cancel me. When I do the audit paperwork at the end of the policy year I simply list the amounts paid and the subs' trades in the form. They adjust my premium accordingly.

I called the agents for both of these subs and talked to them about how much I don't like these $250 fees. I told both of them I would encourage the subs to look for agents and carriers who can handle this minor paperwork without 'junk' fees. Both agents agreed that they were simply junk fees. One agent told me that her main carrier would allow the sub to pay an $1100 fee and then issue as many 'additional insured' certs as needed during the policy year.

Oh yeah... and that $250 does only include one policy year. If you're going to pay for a cert make sure to check whether or not the policy is up for renewal within the next 5 minutes.

[Dick Seibert]

Re: Cost for 'additional insured' status

David:

When you think about it, we have always been able to do that, on audit if we don't have certs they assess us the rate of the trade involved. Jim Eggert went through that he paid a small fortune, as I remember, when he didn't have certs from some of his subs.

What doesn't seem right is the 5%, and I'd check with my broker about that. You are assessed the rate applicable to the trade involved, including the entire amount of the subcontract including the subs' materials and OH & PR. If you look at your policy there should be several pages of rates from all conceivable subcontractors (at least mine does) and the rates for roofers are something like 100%! Jim, are you listening, maybe you can tell David how they rated you for your subs?

[James Eggert]

Re: Cost for 'additional insured' status

The audit process can be easy or give you sweats, mine was a mixed bag.

I found that as long as you have a Certificate of Insurance you should be in a pretty good position. I was missing some certs and eventually was unable to get them when people suddenly changed names or went out of business!
Where I really took a bath was when I had employees! A lot of money to put up with way too much grief! Now up to this year a sole proprietor sub did not need WC, HOWEVER, that also means NO EMPLOYEES, NO FRIEND HELPING FOR THE DAY, and NO INSTANT NEW PARTNER! Every audit I went thru they asked...Did this guy have any employees? Answer yes and bang, it's easy to answer no when you don't allow employees for anyone who is a SP without WC.

I've heard this SP thing may change somewhat but can't fully explain it at this time.

One way to control this is "No check period until the Certificate is in the office and reviewed for date compliance".....to fully implement this a wise person would get the cert BEFORE you even let them on the job!

[David Meiland]

Re: Cost for 'additional insured' status

Here in WA you have to have WC on employees. As GC I am required to verify that the sub is not behind on his WC payments, and the state has a mechanism that lets me do this. All WC is thru the state.

My broker tells me there will be no physical audit of my books until I hit at least $5K in GL premiums. I'm about halfway there. I may take some work soon that will push me into that range. My books are so clean that the IRS and my insurer could come to audit on the same day and I would take a nap while they are here.