Modular Home Builders
INSURANCE CONSIDERATIONS WHEN HAVING A MODULAR HOME CONSTRUCTED
Tod L. Bergen, CPCU, CIC
If you are planning on having a modular home constructed on your lot, there are basically two paths that you can take. You can have a general contractor erect the home or you can act as your own general contractor. For definition purposes a general contractor is someone that will construct the entire home for you. This means that you do not normally need to hire each independent tradesman/contractor to perform the excavation, electrical, carpentry, etc.
There are insurance considerations to be considered whether you hire a general contractor or you act as your own general contractor. I will outline the items of concern and how they should be addressed:
1) CERTIFICATES OF INSURANCE:
You will need to request a certificate of insurance from either your general contractor or each contractor/tradesman that you have work on your home. Contractors are very familiar with certificates of insurance and if you request one, they should be able to comply with your request. If they cannot produce a certificate of insurance I strongly suggest that you hire another contractor.
The certificate of insurance should provide the following limits of insurance:
GENERAL LIABILITY: $1,000,000 Each occurrence / $2,000,000 Aggregate.
AUTO LIABILITY: $1,000,000 Combined single limit.
EMPLOYERS LIABILITY/WORKERS COMPENSATION:
$500,000 Bodily Injury Each Accident
$500,000 Disease Limit per Employee
$500,000 Disease Limit Aggregate
UMBRELLA LIABILITY: $1,000,000 Each Occurrence
Also, the certificate should have the following wording:
The certificate holder is named as an additional insured including completed operations on the General Liability and Auto Liability. Waiver of subrogation on Auto, General Liability, and Workers Compensation/Employers Liability. Coverage for work performed by subcontractors is covered either by endorsement or “Cvaerner Wording” None of the following endorsements apply: CG 2139, CG 2149, CG 2143, CG 2142 or any equivalent
2) HOLD HARMLESS AGREEMENT:
A hold harmless agreement is a contract between you and a contractor that states that the contractor will provide legal defense and pay for damages that are caused by the contractor and for which you are sued. It also should state that you will not be held liable for any injuries sustained by the contractor’s employees or the subcontractor’s employees. A hold harmless agreement is a second line of defense if the contractor’s insurance is inadequate to protect your interests. I strongly suggest that you have an attorney or a competent insurance broker provide a hold harmless agreement for you.
3) BUILDERS RISK:
A builders risk policy is use to cover the home against physical damage while it is under construction. In addition to covering the building while under construction, a builders risk policy provides coverage for building materials while in transit to the building site, as well as materials present at the building site prior to being added to the building itself. The contractor normally provides this coverage. However, I would confirm in writing that the contractor is providing this coverage.
Once the building is completed you need to attain a regular homeowner’s policy. The normal builders risk coverage expires once the building is completed and put to its intended use.
The information provided is for general information only. It is not intended to take the place of competent legal counsel. Each situation may provide unique circumstances. Please refer to your insurance broker and/or legal counsel.
Copyright © Tod L. Bergen, CPCU, CIC