How I wanna be a PP Pro
Join Date: Oct 2012
Thanked 1,277 Times in 562 Posts
CGL policies issued from "your neighborhood" Insurance Agent is not suitable for the Property Preservation business since there is no "flow-over" type clause to the Service Provider. Through many discussions with Ins Co's it is being found that the "p&p contractor" is applying for coverage as a landscaper, janitorial services and a multitude of other job classifications. This has led to many policies being voided upon a claim investigation. This is accomplished by the Ins Co by enacting the Concealment/misrepresentation/fraud clauses. The "right to defend" is then nullified and all expense/liability is burdened by the contractor.
It is easy to understand WHY a certain P&P Service Company wants the contractor to purchase a policy from their "list" of approved Ins Providers. We all know the reason. I foresee in the very near future the premiums skyrocketing on the P&P Service Companies AND the field contractor due to the disproportionate amount of high risk. A "regular" Insurance Company would not be allowed, by law, to assume the Property Preservation classification under a normal General Liability policy so a Surplus Lines Company is/will be the only option remaining thus NO price controls.
A recent ruling in Mn (Jan 31, 2013),although not specific to P&P, allows ALL liability and Ins Proceeds paid out to be reimbursed to the Ins Co if there is ANY misrepresentation of a claim. Ask yourself: As a contractor do you fully understand ALL the actions/work that has been performed, or better yet what has not been performed, over the course of the foreclosure file? Very rarely and impossible for any contractor to ascertain what a prior contractor has or has not completed. What and HOW you document a property will provide the contractor limited protection when the Ins Companies come asking for all related facts and affidavits for the property losses.
I see it only getting worse. Service Companies and banks are looking for other parties to pay for the high cost of repairs...heck its a good business model.... its all by design IMO.