Mold Remediation Insurance coverage? - REO Property Preservation Forum
 
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post #1 of 9 (permalink) Old 08-14-2015, 06:34 AM Thread Starter
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Mold Remediation Insurance coverage?

A P&P contractor receives a bid approval from a Nat to complete proper mold remediation at a property and hires the Licensed and properly Insured Mold Remediation Specialist to complete that had originally bid the job. I am wondering if the contractor is even allowed to sub this out and be covered under the normal GL/E&O policy that we all have. I know that the standard GL with E&O does not cover us for "Air Pollution" and therefore we are not insured to do "Mold Remediation" but can we sub to a Fully Licensed and Insured specialist without repercussion?
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post #2 of 9 (permalink) Old 08-14-2015, 09:54 AM
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Yes you would be covered provided the sub-contractor has the proper Pollution Liability Policy. The only time this would not apply is if you didn't have an Insurable Interest in the property. Many States require a contractor to be a General Contractor in order to hire any subs so if you are a GC in one of those States than Insurance Coverage won't flow "downhill or uphill" since your Insurable Interest stops.
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post #3 of 9 (permalink) Old 08-14-2015, 09:58 AM
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Im sure wannabe is going to step in and disagree.. but i do this all the time, subbing 3rd party work out get things done.

for an example a roof job that's subbed with a 30 year warranty is covered under the contractor that installs roof. This assumes you don't change his price, but you can add a 10% handling fee for over seeing the job.

mold< as long as you have a copy of his insurance and his agreement with the date and address on it then the liability falls on him.

plus EO insurance will not cover a claim if your doing the work yourself and get hit later on at some point down the road and long as you provide a disclaimer that your not insured are licensed to treat mold. they can make a claim but the EO will not pay out. but you must keep detailed records and pics and files of what you did for years.

But that doesn't mean they will try to come after your company.But your a small fish compared to the company and the bank that issued the work order.
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post #4 of 9 (permalink) Old 08-14-2015, 10:11 AM
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Rich, if I understand, you originally bid a mold job to a national using numbers from one of your own subs. The bid has been approved and you are wanting confirmation that your sub, who is licensed and insured to do the work is legit to use. My experience is yes, and as Zuse stated, copies of his license and insurance for cya. While it is likely that liability would be pushed onto him, it will be going thru you first.
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post #5 of 9 (permalink) Old 08-14-2015, 10:34 AM Thread Starter
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My sub is properly Licensed and Insured for Mold and Asbestos Remediation. I was just not sure if I also had to have the proper insurance as well even though I am not doing any of the work. I was worried about it because if in the next 5 or 10 years when the Nat tries to file a bogus claim against me for the Mold Remediation, my Insurance Policy would be the 1st one in line to get hit!
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post #6 of 9 (permalink) Old 08-14-2015, 04:20 PM
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The 3rd party bid has to be submitted on his letter head. with no changes, then you bid separate 10% of the total bid and call it a handling fee for overseeing the job. if you submit his bid on your letter head, then your are responsible for any problems that arise later on down the road.

10% is the norm for over seeing 3rd party work. If the service company balks at the 10% over seeing the job.. which includes financing the job for 30 to 45 days then that's their problem not yours. Remember to ask for 1/2 up front to start the job or the deal is off. large jobs require the service company to have arse in the game.

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post #7 of 9 (permalink) Old 08-14-2015, 04:41 PM
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Mark it up

I'd recommend marking it up 33%. FYI, a 25% discount is actually a 33% markup.

You don't always win, but I love hearing the response to their question of "Why is your markup so high?", to which I follow up with "Just putting the same markup that you are!"

The cubical newbie is always stumped, and upon explanation of how the discount vs. markup percentages works, I almost always hear a light bulb turning on.
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post #8 of 9 (permalink) Old 08-14-2015, 05:02 PM
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3rd party bids are always submitted as a flat fee.. with no discount.
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post #9 of 9 (permalink) Old 08-15-2015, 12:12 AM
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Now Zuse..... Why would I disagree?

A wolf in Sheeps clothing is still a wolf. Adding a "processing fee" is still acting as a General Contractor (because you are contracted with your Service Company as a contractor and not a Property Management Company) and due to this relationship the GC is always held responsible primary and the Sub-Contractor secondary. Your Service Company subs to YOU and not your sub-contractor. This "processing fee" in the contracting world is known as O&P and customary amount is 20%.

There is still coverage for Defense for the GC who will be forced to surrogate the claim to the sub.

I had a case where we rebuilt a fire damaged home and the Plumber we hired (properly licensed & insured) replaced all plumbing. 2 months after homeowner moved back into home a stupid $2.00 fitting popped on a PEX line on 2nd story bath. The resulting $18,000 of damage fell on my Insurance. I did NOT have plumbing on my General Liability policy due to not being a Licensed Plumber but it was still a covered claim due to being a liability claim for 3rd party operations. My policy then subrogated to the Plumbers Policy. No big deal except traumatic to the homeowner.

That case is no different then XYZ providing a work order to their contractor (Rich) who then subs out to a qualified contractor.
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