Joseph Reynolds of RT Specialty Explores Contractor Faulty Workmanship Coverage Innovations at IRMI Construction Risk Virtual Conference
Hamilton, NJ, December 03, 2020 --(PR.com)-- Joseph Reynolds, assistant vice president within R-T Specialty, LLC’s Environmental and Construction Professional (RT ECP) Practice, recently highlighted “Insurance for Faulty Workmanship: The Next Great Innovation for Contractors?” at the IRMI Construction Risk Conference held online in October.
“The marketplace for true Faulty Workmanship coverage forms has grown significantly and the coverage is now offered as separate products, independent insuring agreements or endorsements to potentially address exposures for ‘your work’ faulty workmanship claims in most Contractor’s Professional Liability (CPrL) policies,” says Reynolds. “This includes the repair or replacement of faulty work or the related material costs associated with the ‘self-performed work’ of general and trade contractors like electricians, plumbers, HVAC and mechanical contractors, interior finishers, masons, utility contractors and flooring contractors.”
“The problem is that there is still a lot of uncertainty surrounding this coverage since many CPrL policies typically only cover the work performed by the insured’s subcontractors and not their ‘self-performed work,’” adds Reynolds. “In addition, while many CPrL carriers appear to address the exposures related to the exclusion for repairing or replacing faulty work or material costs, they generally do not. That’s why it’s so important to choose Faulty Workmanship enhancements that are specifically-designed to cover the claims arising out of the workmanship of ‘your work’ or the use of defective materials or products used in ‘your work.’”
As a result, Reynolds stressed that retail agents should advice their insureds to be well aware of not only the specific wording of policies, but also the exclusions that may not cover any or all faulty work circumstances. Therefore, attention should be paid to the professional services and construction activities actually performed by the insured, the definition of “professional services” in any insurance policy, and any exclusions that restrict coverage for instances arising out of faulty work.
Other points surrounded the availability and pricing of Faulty Workmanship coverage, which can be purchased with limits ranging from $1M to $5M and premiums starting as low as $2,500 to $3,500, as well as the realization that:
-The moment contractors sub out their work, perform construction management or delegate design, the risk management or coverage automatically shifts toward professional liability exposures rather than Faulty Workmanship
-Faulty Workmanship coverages commonly dovetail with the exclusions for self-performed work found in most commercial general liability policies. This includes the materials, parts and equipment that are used to perform the insured's work like steel beams, epoxy activators, anchor bolts, etc.
For more information on Joseph Reynolds’ “Insurance for Faulty Workmanship” presentation at the IRMI Construction Risk Virtual Conference, please contact Joe at joseph.reynolds@rtspecialty.com.
About RT Environmental and Construction Professional
RT Environmental and Construction Professional (RT ECP) Practice is a division of R-T Specialty, LLC (RT), a subsidiary of Ryan Specialty Group, LLC. RT ECP is a specialty resource for insurance agents and brokers with expertise in environmental insurance, environmental risk management and construction related professional liability. RT ECP offers agents and brokers single-point access to an ample portfolio of products and services provided by the nation's largest environmental and professional liability insurance providers. As a wholesale broker, RT does not solicit insurance from the public. Some products may only be available in certain states, and some products may only be available from surplus lines insurers. In California: R-T Specialty Insurance Services, LLC License #0G97516 (c) 2020 Ryan Specialty Group, LLC.
For more information, please visit rtspecialty.com or call 609-298-3516.
“The marketplace for true Faulty Workmanship coverage forms has grown significantly and the coverage is now offered as separate products, independent insuring agreements or endorsements to potentially address exposures for ‘your work’ faulty workmanship claims in most Contractor’s Professional Liability (CPrL) policies,” says Reynolds. “This includes the repair or replacement of faulty work or the related material costs associated with the ‘self-performed work’ of general and trade contractors like electricians, plumbers, HVAC and mechanical contractors, interior finishers, masons, utility contractors and flooring contractors.”
“The problem is that there is still a lot of uncertainty surrounding this coverage since many CPrL policies typically only cover the work performed by the insured’s subcontractors and not their ‘self-performed work,’” adds Reynolds. “In addition, while many CPrL carriers appear to address the exposures related to the exclusion for repairing or replacing faulty work or material costs, they generally do not. That’s why it’s so important to choose Faulty Workmanship enhancements that are specifically-designed to cover the claims arising out of the workmanship of ‘your work’ or the use of defective materials or products used in ‘your work.’”
As a result, Reynolds stressed that retail agents should advice their insureds to be well aware of not only the specific wording of policies, but also the exclusions that may not cover any or all faulty work circumstances. Therefore, attention should be paid to the professional services and construction activities actually performed by the insured, the definition of “professional services” in any insurance policy, and any exclusions that restrict coverage for instances arising out of faulty work.
Other points surrounded the availability and pricing of Faulty Workmanship coverage, which can be purchased with limits ranging from $1M to $5M and premiums starting as low as $2,500 to $3,500, as well as the realization that:
-The moment contractors sub out their work, perform construction management or delegate design, the risk management or coverage automatically shifts toward professional liability exposures rather than Faulty Workmanship
-Faulty Workmanship coverages commonly dovetail with the exclusions for self-performed work found in most commercial general liability policies. This includes the materials, parts and equipment that are used to perform the insured's work like steel beams, epoxy activators, anchor bolts, etc.
For more information on Joseph Reynolds’ “Insurance for Faulty Workmanship” presentation at the IRMI Construction Risk Virtual Conference, please contact Joe at joseph.reynolds@rtspecialty.com.
About RT Environmental and Construction Professional
RT Environmental and Construction Professional (RT ECP) Practice is a division of R-T Specialty, LLC (RT), a subsidiary of Ryan Specialty Group, LLC. RT ECP is a specialty resource for insurance agents and brokers with expertise in environmental insurance, environmental risk management and construction related professional liability. RT ECP offers agents and brokers single-point access to an ample portfolio of products and services provided by the nation's largest environmental and professional liability insurance providers. As a wholesale broker, RT does not solicit insurance from the public. Some products may only be available in certain states, and some products may only be available from surplus lines insurers. In California: R-T Specialty Insurance Services, LLC License #0G97516 (c) 2020 Ryan Specialty Group, LLC.
For more information, please visit rtspecialty.com or call 609-298-3516.
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