Some Thoughts Concerning Commercial Insurance
During the past decade or so, we have come across quite an assortment of unique and interesting companies, ranging from contractors, business consultants, to product manufacturers who have come up with some really unique products to just about everything in between. Our website has been quite active these past few years, and in the course of talking with potential clients, we have discovered some very interesting items.
With new companies that are just starting out, we understand there is no prior insurance, and, in fact, we applaud these companies for taking the proper steps in securing the proper insurance coverage before they begin operations. They understand how important it is for a company to have the proper Phoenix business insurance program in place should the unthinkable happen, and should a claim be filed against the company, they will be protected. Then, there are those companies that are searching for coverage for the first time even though they have been in business for years! These are the instances that baffle us. Here are a few instances in which this happened.
A General Contractor called in to acquire Phoenix general liability insurance for a major remodeling project that was going to be in the range of about three hundred thousand dollars. In discussing his insurance needs, the contractor told us that he had been in business for six years and had never acquired an AZ general liability insurance policy. When we pressed why he didn’t have insurance, his response was he really didn’t see a need for insurance because he couldn’t foresee a situation where he would ever need it. He told us his work was always performed perfectly, and that it was just a waste of money to purchase insurance, and the only reason he was needing it now was that the lender was requiring it. Also, in talking with this contractor, we found out that quite a few of his sub-contractors had no insurance or licenses, and he just simply gave them a 1099.
We ran this info past a few insurance carriers we use for our contractors, and after they found out the situation, they decided to pass. We found a couple of carriers who would write the risk, but with very specific guidelines and at a much higher premium. Insurance carriers take a careful look at the history of the risks they are asked to consider, and many carriers will simply not entertain any risk that has gone for years with no insurance coverage. The carriers that will consider this type of risk will carefully underwrite it and surcharge it for a specific time period.
Another of the many inquiries from our website we have been receiving is in the Worker’s Compensation Insurance area. It is to be expected that when a new business is starting and they plan to have employees, they follow the law and acquire worker’s comp insurance for those employees. It’s not only the correct course of action, its state law that if your company has employees, you are required to have Worker’s Compensation Insurance. What we didn’t expect to find is the number of companies looking into worker’s comp that have been in business for some time, have employees, and are just now getting around to acquiring AZ worker’s compensation insurance which is truly unbelievable!! In most of these cases, these companies were just treating these employees as independent contractors and simply issuing them 1099’s, and, thus, avoiding paying for worker’s compensation insurance. State agencies, and even the IRS, have very fine guidelines on who is classified as an independent contractor, and we advise you to research those guidelines thoroughly. In many cases, you will find that the people you considered independent contractors are, in fact, actual employees of the company.
To fully understand the advantages of putting a proper insurance plan into place for your company and what these policies can mean for your company, the smart move would be to sit down with an experienced and professional insurance broker who can help you with your available options. The brokers at PJO Insurance Brokerage would be more than happy to help you through this process.
PJO Insurance Brokerage
By Patrick O’ Neill
4103 E. Prickly Pear Trail
Phoenix, Arizona 85050