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The Insurance Insider Podcast Ep 2: How an Expert Will Help with Insurance

Kailey: So a business owner that has maybe barely considered their insurance or mostly overlooked it in the past. Would you say now that the markets are more complicated they’ve ever been and that would maybe be a reason that they need to seek out an expert?

Ty: You know, that’s an incredible question and it’s, it’s very apropos to today’s market. There are two channels that are developing in commercial insurance. One channel is the traditional purchasing commercial insurance through an independent insurance agent. The other channel is there are insurance companies out there now that are offering these products online and they’re making them very inexpensive.

And the interesting thing is that the business owners, when we start to dig into their policies that they purchased online. It is very common that those policies specifically exclude what they do. So to answer your question, yes, more than ever, there is a very specific need for an advisor to counsel that client on exactly the type of policy they need to be sure that it doesn’t exclude the risks that they’re involved with, that the business they’re involved with. And we’re, we’re seeing this development of the online channel and no advisory services whatsoever. And what you’re seeing is a, frankly, a product that is not appropriate for that business owner and that business.

Kailey: So let’s say you’re a construction owner here in South Florida, because as we know in South Florida, construction is everywhere. It’s been booming and it’s growing. So what are maybe some common issues that you see a contractor, a general contractor, or anyone in the building aspect of the markets, what challenges do they face?

Ty: Yeah, that’s it.

Kailey: Especially when it comes to insurance.

Ty: That specifically we see general contractors with a couple of major issues and then there are several minor issues that still could be potential problems, but the one big issue that a general contractor faces that they utilize subcontractors. And when you utilize a subcontractor the biggest mistake is a general contractor will make is not having a very well-written independent contractor subcontractor agreement.

Those agreements for a general contractor are the wall that protects the general contractor and their balance sheet. Specifically, if we do not, if the general contractor does not appropriately set up an indemnity agreement, hold harmless agreements, waivers of segregation agreements, additional insured and per project aggregates along with primary non-contributory language in an appropriate way it could end up costing that general contractor a lot of money and the reason why is because there might be an uninsured subcontractor loss that now passes back to the general contractor.

And what’s happening is the insurance companies are wise to this. They’re now writing in their insurance agreement with the general contractor that if the subcontractors do not meet certain levels of insurance requirements, that the general contractor’s policy will either limit or exclude a claim arising from the subcontractor. So this could become a very, very expensive mistake that a general contractor makes. We work hard to make sure that our clients clearly understand this and that they have set up the appropriate risk transfer. agreements and are following the risk transfer techniques and making sure that the subcontractors are following those requirements.

Kailey: So is that a contract that you’ve looked over and that you would be able to advise a general contractor on whether or not they could possibly be open to having a claim filed against them that maybe they didn’t intend to have to be able to pay for?

Ty: Yeah, that’s a great question. The, you know, specifically what we do is we work with their attorney to make sure that those, those important risk transfer language is set up so when the subcontractor signs the agreement, they understand that there are certain risk transfers that they’re accepting and then we’re ensuring then the subcontractors insurance company follows those risk transfer techniques and protects the general contractor.

But I also like to mention one other thing. We also work with a lot of subcontractors. When the subcontractors enter into these agreements we want to make sure that the subcontractors are following those techniques to make sure they’re in compliance with the agreement that the general contractor set up. In addition that if there is a claim that the, that they’ve accepted those that their insurance companies accepted those those risk transfers set forth by the general contractor and and and that they understand that and that that when there is a claim, it transfers appropriately to the general from the general contractor to the subcontractor and the claim proceeds moving forward.