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Roofing and insurance: what you need to know

If you have a business or a commercial property, it’s crucial that any contractor has the insurance required to cover any damage or accident, should it occur.
Government institutions, building management firms and major contractors may have whole departments that deal with insurance, but if you are a private builder or building owner looking at different roofing contractors, it’s important to know what constitutes proper coverage.

Job size doesn’t matter

The biggest misconception regarding insurance is that the size of the job dictates the amount of coverage you need. The fact of the matter is, whether you need a $2500 roof repair or a new $1 million dollar roof installed, you should be looking for the same insurance coverage from your contractor.
The purpose of commercial general liability insurance is to cover a contractor’s legal liability exposure against a third party for bodily injury and property damage, including business interruption, should something unfortunate happen, such as water or fire damage.
If you are making a small roof repair to your mall roof, the building catches fire and you can’t operate for 2 months, the size of the roofing job is irrelevant—what counts is liability coverage. A plumber with a torch could be a bigger risk to your building than an entire crew of roofers.
Be sure to ask for a certificate of insurance on any contract job. The certificate should be job-specific, identifying you as the additional insured. This means that you as the building owner are named on the certificate as being insured. The certificate should also show the amount of insurance and the type of work it covers, for example hot work (use of tar, torch-on, etc.). If your contractor can’t provide a certificate, you don’t want them on your site.

Know your insurance risks

With roofing, as with any trade, you need to know that the company you hire can cover the costs in case of damage or accident. The main risks you run with roofing are fire damage and water damage.
Depending on where it goes and what it affects, water can be worse than fire and it doesn’t take much for it to seep inside a building. If there is water ingress, most building owners rip out affected areas to avoid the risk of mold growth. Remediation is typically expensive and invasive.
It’s up to you and your insurance broker to know how much liability insurance will cover your legal liability in the case of an event. Make sure that you take the time to analyze your risks and know what they are. Keep in mind that the kind of work you are having done can increase risk, which might influence the amount of liability insurance you need.
For example, replacing an old roof on a data centre involves more risk than installing a new roof on a warehouse under construction. The first contains millions of dollars’ worth of equipment and data, as well as staff, while the other is empty. Climate is another factor, especially with roofing. If the building location is known for wind or rain, weather will influence the risk profile.

Insurance coverage is an indicator of contractor capability

Every contractor should have commercial general liability insurance. General liability will cover third party liability if you cause bodily injury or property damage to a third party.
Major roofing companies expect to be asked for a certificate of insurance whenever they tender a bid on a contract. Insurance specifics often vary from contract to contract, so insurance forms a big part of roofers’ day-to-day administration.
The amount of coverage that a roofing company carries can reveal whether they are suitable for your needs. The bigger companies in the roofing industry should carry sufficient insurance to cover situations that can arise. In certain circumstances, claims can be valued at many millions of dollars.
When evaluating roofers for a commercial application, make sure to sit down with your insurance provider to discuss what limits are adequate for your needs.

Major roofers are asked to produce certificates of insurance with liability limits of $5 million and up on a regular basis. If the company you’re dealing with cannot provide such coverage, it puts you at risk of not being able to recover the costs of damages or accident associated with the job.

Commercial general liability insurance

For ad hoc repairs and installations, commercial general liability is the insurance coverage that you need to ask for. Depending on your needs, $5 million liability is the least that you should accept. If you are undertaking extensive renovations, expanding or undertaking a new build, you might ask your insurance broker and your general contractor about a wrap-up policy for the duration of the project.

Other kinds of insurance policies

There are many other kinds of policies that might be suitable, depending on the type of project you are undertaking or the repair that you are having done. Your insurance provider should be able to assess your risks and recommend the proper course of action to protect your liability exposures. Other types of policies that are often associated with construction projects are Wrap-Up liability insurance policies and Builders Risk insurance policies.
Wrap-Up liability insurance policies are project-specific policies that cover most of the parties (trades) involved in the project.  The biggest advantage of the Wrap-Up is that all parties are covered on the same policy for the specific project, thus avoiding delays in determining responsibility in the case of a liability situation.
Builders Risk insurance policies cover the cost of repair or replacement when damage is caused by an insurance peril on a specific project.  It typically covers the building materials and the labour associated with a specific project.  With a Builders Risk policy, almost all of the parties involved in the project (i.e. owner, contractor, sub contractors) are covered.
To discuss your insurance needs, don’t hesitate to contact Luc Caissie of Assurance Goguen Champlain Insurance Inc. in Dieppe, NB. Luc is VP of Commercial Lines and you can reach him at lcaissie@goguenchamplain.com or 1-844-862-2070.

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