The Expert Podcast

With insurance policies for contractors, we're starting to see where different types of specialized work require different types of insurance. A general contractor insurance policy may not cover some specialized work—maybe with artistic work like marble or high-end woodwork, or even things that are more structural. One of the things we're finding is that specialized work creates additional risk and exposure that may not be contemplated under a more general professional liability policy. Even your bond may have exclusions for certain types of specialized work.

So, if you are a contractor, builder, or some other construction industry professional and you're branching out into some type of specialized contracts or projects, you might want to check with your insurance broker to make sure that your overall general policy still covers those types of activities. You might think that a broad policy covers pretty much everything, but it's actually, a lot of times, the other way around. You want deeper coverage in an area that's more specific.

We worked with a client that did a lot of marble work. They started out with countertops—granite and marble countertops—and at some point, they had clients that wanted to do more artistic work. They really liked it; they had the equipment for it, the materials handling devices, and the grinding equipment to cut and shape the marble into certain configurations. Instead of just horizontal countertops, they were starting to do vertical walls, building fireplaces, and outdoor landscape items.

Come to find out, that requires a little more engineering. You might have to put support braces or maybe even small rebar pieces to hold it together. At one point, one of the projects they worked on actually collapsed. It did some damage—luckily, it didn't hurt anybody—but it collapsed to the side and damaged some water lines as well as the exterior structure of the house. It turns out it wasn't anything the contractor had done wrong. They had done everything right, but there was some water erosion underneath this piece of art that was put on the yard.

The problem is, since they did not have coverage for that type of work, their insurance didn't pay—even for the defense. This is something you want to look at if you start branching out into different areas. Review your coverage to make sure what you have is going to be sufficient to ensure that you're not going to have gaps in coverage and have exposure that won't be paid for if you have a loss.