If you do, there are some very important implications for your business. If a contractor is working on your premises (for you or one of your customers) without general liability insurance and injures someone, or damages your property or your customer’s property, you may be liable for the injury or damage. If your general liability policy responds to the claim, you may even owe additional premium dollars for the type of work that the contractor was performing!
For example, let’s say you own a marina and hire a dock builder to build you a new dock. While working, one of the dock builder’s employees drives a forklift into one of your slip rental customer’s parked car, causing $20,000 of damage. If the dock builder is properly insured, you as the marina owner do not have to worry, the dock builder’s general liability policy would pay for the damages. However, if the dock builder did not have insurance, the marina could be sued, and then your general liability policy would have to pay the claim. Your insurance company could then perform an audit and require you to pay additional premium based on the additional “dock building” classification of work. Another marina example may be that one of your boat slip rental customer’s hires a boat mechanic to perform service work on their boat while in your dock slip. That mechanic could cause a fire, damaging your property, and potentially many of your other slip renter’s boats. Of course, the two above examples relate to property damages, it could be much worse if serious injuries or death occurred! The above examples relate to marinas but apply to all businesses that allow contractors to perform work on their premises.
All kinds of businesses hire contractors at various times such as painters, electricians, plumbers, landscapers, etc. Have you thought about what could happen if one of these contractors does something to injure your employees or customers?
It is critical that a business owner takes the appropriate steps to protect his or her business. The best way to do that is to require all contractors who set foot on your business premises to perform services should be required to present a Certificate of General Liability and Workers Compensation insurance to your business manager. This certificate should show $1 million General Liability limits, show the requiring business as an Additional Insured, and document proof of Workers Compensation insurance. You should take steps to monitor the status of these certificates to ensure that you always have a valid certificate on file before allowing contractors to come onto your business premises to work.
Business Owner Self Assessment
1. Do you hire contractors to perform any work at your business premises? Examples could be painters, electricians, roofers, landscapers, concrete contractors, etc.
2. Does your business have customers who may hire contractors to work at your premises? Typical examples could be marinas, apartment buildings, ministorage, etc.
If you answered yes to #1 or #2 above, please continue…
3. Do you require that these contractors provide proof of general liability and workers compensation insurance prior to working at your premises?
4. Do you require that the contractor add your business as an additional insured on their general liability policy?
5. Do you require that the contractor’s general liability policy provide a minimum $1 million limit of insurance?
Doug Timmons, CIC, CMIP
Marine Insurance Specialist
Commercial Risk Service
479-273-1376
Remember, it’s not the “reality” that matters; it’s the “perception” of your employees. The best way to know what your employees are thinking is to ASK THEM! Part of your annual review process each year should involve giving them a confidential questionnaire called the “Employee Compliance Survey”. This form asks the employee their perception of whether there is harassment of any kind in your work place, as well as any other biases or violations of company policies or compliance. This survey allows you to have an outlet to let your employees know that you care about them, that they have an outlet and a responsibility to let management know of potential problems.
