Roofing Contractors Advisory

Risky Business: Finding insurance coverage for roofing contractors can be an extremely difficult task
By NIP Specialty Brokerage

As the overall insurance market softens, the construction industry remains a very difficult class of business to place.  In many cases these days, contractors are being forced to make decisions on what type of operations they will perform based on the availability of insurance.  There are several different residential exclusions floating around in the insurance industry today.  Some carriers, for example, may exclude condos and townhomes while providing coverage for tract housing and custom homes.  Detailed stipulations may apply, such as the amount of homes in a tract development – or the amount of new residential work permitted.  Some carriers provide residential coverage for ‘existing’ structures, but no new construction is covered. 

The result is that some contractors are being forced to pull out of the residential market completely, or be very specific and limit what types of residential work they will do.  Others may opt to go bare on the liability for such exposures, or find a carrier who is willing to provide the coverage (but pay the price for such coverage).  Brokers need to know what type of residential exposure their insured actually has, and the insured needs to pick a direction and stick with it to avoid lapses in coverage.

Roofing takes “hard to place” to new heights
In an already difficult industry, placing liability insurance coverage for roofing contractors in particular is a whole other ballgame.  Roofing, as an industry, is a very tough placement simply due to the nature of the job.  A sub-par roofing job will usually end up coming back to haunt the property owner, and the roofing contractor.  A leaky roof can result in destruction of property and deadly mold, which inevitably lead to lawsuits. 

Roofing is also a very dangerous business; that’s no surprise for a trade that involves working at heights.  But it is not just the risk of a fall – the equipment and the toxic materials used also pose a threat to both people and property, especially the use of hot torches and hot tar.  It’s not hard to understand, then, that brokers across the country are having great difficulty securing liability coverage for roofing contractors.

Most carriers today try to minimize their exposure by attaching a roofing warranty onto the GL policy.  This warranty states that unless certain precautions are taken to mitigate loss, there is no coverage.  Coverage is provided assuming proper safety measures are in place, such as remaining on the job site after a heat application to ensure the process has been completed and there is no risk of fire, providing in-depth inspections of the finished roof, and always having a functional fire extinguisher on hand.  For most roofers, this warranty is not an issue, it is commonly accepted. 

An issue arises when certain carriers exclude hot tar and torch down work completely from the GL policy.  While the use of such applications is becoming less common, most roofing contractors still have some exposure, even if it’s only 5%.  Brokers need to be aware of what percentage, if any, the insured is using heat application such as hot torches. Brokers also need to evaluate carrier warranties and make sure their clients are aware of the necessary precautions needed to be taken so that in the event of a loss, insurance will provide coverage.
Workers compensation coverage for roofers is equally difficult to place for the same reasons, with falls being the leading cause of insurance losses.  According to an Insurance Information Institute (III) underwriting guide, the occupational injury and illness rate for roofing contractors is the highest in the construction industry, and more than double the average rate for all private industry.  One in five roofing workers will suffer injury or illnesses in the course of the year, the guide says.

It’s even harder in specific states, New York for example.  Particular NY laws, such as sections 240 and 241 of the labor law, make the employer responsible for any falls from scaffolding, regardless of who is at fault.  As if it’s not tough enough for contractors to get proper liability and WC coverage in the state of NY, roofers have the added headache of carriers refusing to write them specifically due to the height exposures.  At some point the state or federal government may have to step in to evaluate the situation. 

In addition, most roofers with any residential exposure are required by General Contractors to carry the blanket additional insured endorsement for both ongoing AND completed operations.  While the ongoing operations end may be easily obtained, the completed operations coverage is another story.

Keys to Success
NIP Specialty Brokerage
has had success placing roofing contractors across the country, with the exception of CA and NV, due to our strong relationships with insurance carriers that offer terms on this hard-to-place class of business.  NIP Specialty’s knowledge of the markets and good relationships with the underwriters at our insurance carrier partners helps us succeed in getting terms for our retail agents.

If you have roofing clients, one thing they can do is train their workers extensively on proper techniques and safety awareness.  A good safety record won’t exactly make them an easy risk to place, but a bad record will make your job as a broker near impossible.

As with any difficult construction class, there are things you can do to help speed the submission and delivery of a quote. Be sure to include: a completed contractor supplemental application, five years currently valued loss information, clarification of residential vs. commercial operations, payroll breakdown.  An explanation of the contractor’s safety practices can also help.  

With all these pieces in place, NIP Specialty Brokerage will be able to work quickly to secure you the best coverage and rates possible.  Give us a call on your next hard-to-place construction industry account and see what we can do for you.

If you have an account in this class, please submit it to us today:

For more information about NIP Specialty Brokerage, call 1-800-446-7647 Ext. 7515.

About NIP Specialty Brokerage
NIP Specialty Brokerage
is a wholesale brokerage operation targeting non-standard commercial risks underwritten by admitted and non-admitted specialty carriers, with a focus on the Construction Industry. NIP Specialty Brokerage assists agents and brokers in the structure and placement of complex insurance risks throughout the United States by accessing NIP’s brokerage expertise and relationships with global insurance markets.

NIP Group, Inc. 900 Route 9 North | Suite 503 | Woodbridge, NJ 07095-1003 | 800.446.7647