# Don't read this is you are easily depressed!



## Rich Wozny (Aug 18, 2005)

TimNJ said:


> Hmmm, how many members are there on this board, besides you, who would pull their checkbook out and write a check for $80,000 and move on.
> I'm writing the $80,000 check right now! Only problem is don"t try to cash it. But seriously, most of us know that insurance companies love to collect premiums,:clap: but don't like to pay on claims:no: Make a couple of small ones on your HO policy, and see how fast you'll be looking for a new insurer. Read your homeowners or auto policy front to back, and tell me if you really know what your covered for Every time you get your renewal notice there's all those little pamphlets [riders], telling you another thing they won't cover. When people started suing for millions on mold problems, within 2 years most HO policies no longer covered this. I saw a report a while after Katrina hit, where they were saying insurance companies would increase their profits big time, after initial payouts, by jacking thier premiums. They will pick you apart legally on clauses if they think they can make more profits by taking you to court. Most major insurers have huge legal departments, many of their execs. are lawyers. Why don't we all give up what were doing now, go get law degrees, and sue the S$$t out of everyone?


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## AAPaint (Apr 18, 2005)

What it boils down to is that insurance is defrauding their customers and has been since insurance began. YOU need a lawyer to deal with YOUR own insurance company these days...and a good one at that.


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## PipeGuy (Oct 8, 2004)

Craig said:


> I hope this guy has a decent lawyer. If so, his lawyer should be telling him that he can still join the framing sub as a defendant if sued by the homeowner. Also, his lawyer should remind the insurance company that its duty to defend the claim (i.e., pay for the legal defense of any lawsuit) is greater than its duty to indemnify (i.e., pay the amount of any damages). The latter distinction is important because the cost of defending this claim could be as much or more than the amount of the damages. Also, it brings at least some financial burden onto the insurer so it will have a stake in the claim regardless of whether it denies coverage. Needless to say, the contractor can also sue his insurer for a declaratory judgment to compel coverage.


Great post. Often the problem is guys like Bob know as much about getting a good lawyer as they do their subs insurance coverage.


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## Bone Saw (Feb 13, 2006)

For pete's sake Mike I'm not talking accident as being preventable, I'm talking about him having a sub without proper coverage as being preventable. It is not anyones repsonsibility but bobs to know that his subs are properly insured and/or classified. A little due diligence on bobs part would have spared bob. But it isn't just due diligence that would have saved him from *knowing * his sub was not properly insured to meet his needs, but not being complacent about it wheather he know or not. And it damn sure isn't anyones responsibility to make sure he knows this. If I don't have a licence to operate a vehicle over 26,000# and I have insurance for a toyota camery, but I decide to drive my buddy's tractor trailer weather I know I need a licence to do so or not and kill someone, it's not the insurers responsibility to cover or tell me "oh and by the way, if you ever happen to opperate a tractortrailor, without proper license and/or insurance you are on your own", Mabey im being overly criticle, but I just don't see it as anyone but bobs responsibility, I'm sure he's a good guy and a good contractor, but he got a hard learned lesson, that is pretty selfexplanetory and preventable

andhow the hell is that bs mike, if I am going to hire a sub to do work that I spec'd. If I hire an electric sub, to hook up a hotub that I installed, his work will be in my scope of work, He'll pull his own permit, and he'll provide me with a declaration and licence before I decide to use him (on job by job basis) and a cert to the twp when he pulls his permit, or for all intents and purposes that hottub will just be a big flowerpot. I have plenty of instances where customer wants to hookup the tub using a sub or family member of their choosing and I make damn sure that they have signed off knowing that if that once the deck is built and tub is physically in place that I am not responsible for the hookup of that tub and I make damn sure that the inspector and dept know this before permit is ever issued:thumbsup:


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## Mike Finley (Apr 28, 2004)

Don't mean to get on you, but I just don't think you are dealing with reality...



Bone Saw said:


> his work will be in my scope of work, He'll pull his own permit, and he'll provide me with a declaration and license before I decide to use him (on job by job basis) and a cert to the twp when he pulls his permit, or for all intents and purposes that hottub will just be a big flowerpot.


Where I am from the electrician will not be pulling his own permit, the electrical is part of the general permit on a project, he will "pull" the permit (meaning apply for it under his license) but his permit will not be issues separately, it will be through my permit. On a project that only requires an electrical permit then it would be as you described, but not one with a general building permit for a project that involves more than one trade.


Again using your own example


> He'll pull his own permit, and he'll provide me with a declaration and license before I decide to use him (on job by job basis) and a cert to the twp


so what? So what if he is committing out right fraud? What if he has some white out and whites out the dates on his out of force insurance policy certificate and gives it to you? 

I simply don't see how a GC can ever know exactly what another business is doing, the only thing he can do is follow the procedures that are industry standards.


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## Gordo (Feb 21, 2006)

When I joined the local builders association it was because I liked their insurance plans (both WC and GL). They have their own broker/underwriter. They were the first insurance company to actually sit down with me and explain saftey issues and provide me with saftey literature. They also explained to me concerning GL that I should "marry" into my subs GL/WC and vice-versa. That way if any hanky panky goes on its insurance company vs. insurance company. Each insurance company is in the "know" if a divorce goes down. Btw ,we are a small remodeling company.

Most insurance agents do not care about you or your business because they do not make much money from contractors GL and WC. Their bread and butter is in other areas.

Get with a like minded organization and you will see the difference.


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## go dart (Dec 6, 2005)

actually the guy (subcontractor) was insured as a drywall hanger not a rough in company so theres more to this story. i agree once you get the ins certificate you feel like you've done your part and it is scary. interestingly mike there is no workmans comp coverage on ypur certificate. are you totally subcontract?


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## Sonny Lykos (Mar 11, 2006)

Mike, you’re right. When I started my new company in ‘99 I notified my ins. agent that I would be doing basically “handyman work” and very minor work that would be considered small home improvements - under $5K. My agent sells Ohio Casualty coverage - a great company, IMO. 

Anyway, I purposely had them list the trades I’d be doing including elec and plumbing, which I only do minor stuff in even though I’m not licensed in either one of them. But changing a recep, switch, ice maker line, faucet,etc. is covered as “handyman” work according to Ohio C.

So about two years go I had an incident when a realtor thought he was turning the water off, he actually turned it on as we were leaving. He accidentally turned the water off to the hot water heater. I had not completed the change (ice maker line) over due to not having a proper fitting. About $4K in damage. He had the balls to sue me. Ohio provided an attorney and settled with him for about $2500, and they paid that less my $500 deductible. I have $1M in coverage that costs be about $1000 annually. 

Granted, it was only a small claim, but again IMO, ethical insurance companies do exist.


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## Mike Finley (Apr 28, 2004)

Gordo said:


> When I joined the local builders association it was because I liked their insurance plans (both WC and GL). They have their own broker/underwriter. They were the first insurance company to actually sit down with me and explain saftey issues and provide me with saftey literature. They also explained to me concerning GL that I should "marry" into my subs GL/WC and vice-versa. That way if any hanky panky goes on its insurance company vs. insurance company. Each insurance company is in the "know" if a divorce goes down. Btw ,we are a small remodeling company.
> 
> Most insurance agents do not care about you or your business because they do not make much money from contractors GL and WC. Their bread and butter is in other areas.
> 
> Get with a like minded organization and you will see the difference.


Excellent insight. Personally I can't wait to get hooked up with my local builders and discover all this great synergy that is waiting out there.


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## Mike Finley (Apr 28, 2004)

go dart said:


> interestingly mike there is no workmans comp coverage on ypur certificate. are you totally subcontract?


No, actually very little sub-contract, I am actually limited percentage wise by my liability insurance company as to just how much sub-contracting I can hire.

I am the only employee of my company and am eligible as an officer to waive WC. All that is about to change, I just completed getting my WC quotes and am looking at doing my first hires pretty soon.


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## Grumpy (Oct 8, 2003)

I was going to hire a new roofing sub but on his certificate it showed his classification which I really liked and was the first time I had seen it... however his classification said interior carpentry NOT roofing.

I know alot of guys purposely mis-classified. Heck when I first strted my insurance co had me misclassified (this was not my mistake) even though I told them what I would be doing. 

I think they should put all classifications on all certificates, this would alleviate ALOT of insurance fraud, either purposely or by mistake.

In regards to the uninsured subcontractors clause in his policy, that's odd. I will have to check my policy but I know of no such clause. I do know if I use uninsured subs I have to pay their insurance. I hired a sub who I knew for years who worked for another of my subs. He went out on his own and got GL but didn't get WC until he started getting some work. Anyways because I knew this guy and knew his quality and knew he was safe, I decided to take the risk. We negotiated a price list and then I asked if he would take 19% less (siding WC rate) until he got WC because I woul dhave to pay for it and he agreed. 

Come audit time my insurance co sent me a bill for his labor as we anticipated, as they would if he were an employee.


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## Mike Finley (Apr 28, 2004)

Grumpy said:


> I think they should put all classifications on all certificates, this would alleviate ALOT of insurance fraud, either purposely or by mistake..



That's a great idea, I can see how helpful that would be.



Grumpy said:


> In regards to the uninsured subcontractors clause in his policy, that's odd. I will have to check my policy but I know of no such clause. I do know if I use uninsured subs I have to pay their insurance.


It seems like every insurance company can be different. I spoke of this a while back because my insurance company came right out and told me that I would have to make up the difference in premium rate and then as soon as they had the check they would drop me.


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## Bone Saw (Feb 13, 2006)

Mike Finley said:


> I simply don't see how a GC can ever know exactly what another business is doing





GI JOE said:


> Knowing is half the battle


:thumbsup:


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## paintr56 (Feb 4, 2005)

Too many people here want to blame Bob. The insurance company should pay. Every year my insurer audits me I would think this is standard practice. I am asked about all subs I used that year and must submit proof of thier insurance. This being the case and Bob having used this sub for six years Bob's insurer has the same information as Bob and they have been fine with the subs coverage. 

Insurance companies make thier profits turning down claims. 


Jim Bunton


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## Sonny Lykos (Mar 11, 2006)

For pertinent customers, I have a certificate of insurance faxed to them. From that day on, any changes in my insurance qualifications is also faxed to those on the list who had previously been faxed a Cert. copy.

I learned decades ago the insurance companies are in business to take in “premiums” and not to shell out monies for claims. For that reason, they will look for any possible legal reason to deny a claim. Knowing that, I make sure I never give them a reason.

An employee leaves the site for lunch and leaves an extension ladder against the side of a house. A neighbor’s 8 year old boy sees it, climbs up, falls off and is paralyzed for life. The contractor gets sued for $5M but only has $1M in coverage. Guess what happens next, and especially if it’s “corporate veil “ is successfully pierced”

That is one of the aspects of owning a business - any business. One mistake of a large caliber can put the business owner out of business, possibly even into bankruptcy. Another reason why have annual corporate meetings, even though I’m the sole owner of all stock in my Sub-S corp. I do not want to give any attorney a “reason” to pierce my “corporate veil”, as it’s called in legal terms.

I Michigan we were renovating a 4 story house - about a $150K job - big back then inthe 80's. While driving back over a weekend from Chicago I go a phone call about a fire at that job, and since it was off the highway, I got off and went there. All of my insuraces were tight, and thank God because the fire inspector said he suspected on of my "workers" screwed up. Looks like I was about to be sued. 

I used to use a log book on each job so we could document exactly what we did each day, who worked there, the weather conditons, etc. Our log book also stated that that Friday, none of our guys, nor any subs did anything in that garage area. In further inspection the fire inspector decided the cause of the fire was instantaneous combustion in the ground level garage where the owner, not us, has used some rags and paint thinner to clean something up he worked on, and through them into a plastic garbage can. 

We were off the hook for about $90K in fire & smoke damage. The nice thing about it was we got paid for our work to that point, AND the subsequent fire restoration repairs.

So it’s not a fact of “blaming” Bob for anything. He just forgot, didn’t know, or one way or another did not satisfy the paractice of assuring the legal protections he needed for his company. And to that regard, many of us are just as guilty.

As I've stated here before, so much for those with a “tradesmen” mentality who become business owners but still maintains a tradesman, as opposed to changing it to a “business” mentality. My tardesman mentality is only initiated when estimating and working in the field. My “business” mentality is on 100% of the time, and even in the field, it always trumps my tradesman thought processes.

Always think: CYA!


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## Bone Saw (Feb 13, 2006)

I agree 100% with everything sonny just said, Had a real pain in the ass customer last spring, husband was an attorney, stay at home wife/mom and about 5-6 kids around throughout the job, I took every percautionary measure possible yet on a daily basis there were kids playing on my trailer jumping off my wood pile, taking wood from my scrap pile all of which had a perimeter of properly tagged red danger tape. I took pictures of the whole site and called the attorney numerous times at work what was going on and I was going to shut the whole project down if he and/or the wife couldn't control the kids. I let my insurer know what was happening and emailed pictures of the site, as well as my agent and the twp as well. The wife was hellbent on having the deck complete for her daughters confirmation party which I never promised or even said that would be the case, she more or less expressed that she was having a party on the deck complete or not. deck with no railings yet, so I borded up the door, put tagged red danger tape up all over the deck the goddamn thing liiked like a crime scene, notified my agent, insurer immediately and the twp and called the husband at work again and told him that He'll be hearing from my attorney real soon. I make sure I am properly insured and let people know that once I show up to start work, I am not there to FU K around. I honestly think these poeple were trying to trying to orchestrate a plot to sue me, I never gave the FU:furious: KERS the chance:thumbsup:


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## asbestos (Mar 22, 2006)

Bone Saw said:


> Doesnt really take much effort to ensure a zero margin of error or in this case a zero margin of catastrophe, watch the weather channel, throw on some osb or anything to keep water from pooling between framing bays. It's a damn shame for that guy, but that $H!T is easily preventable.


​Hindsight is allways 20/20.
I will bet that dozens of times there were things like this that could have happened but did not. Ever once just leaned a bit to far on a ladder? just because you did not fall does not make the mistake any less stupid then those who did. 
Perhaps in one of his subs ins. contracts there was an item buried on page 4 that exempted coverage for tarp related failure. 

" in the events ,or single event, of a temporary textile petrochemical treated incemancy protection device,being utilized in it's capacity as a hydrological barrier, is used, or a non-woven geo textile material, or a linear low density polyethylene film. The relavent standards as in ANSI 4598.138.5491 shall be considered as relavent in all cases with the following exceptions 3.B 12.65, Fb 2-4.6) certification of the relavent standards does not constitute, or shall not be deemed to constitue, relative to compliancy principals of WAC 296.653. a,c,d,f, or NMUS z359.1 that standards shall be considered in compliance with the relative standards themselves. "

I guess bone saw would have read that *before* he let them start work.*Then* held up the project for a week while they got a ruling on the matter. I Just think some of those comments are overly nasty. I would also guess that by some of the spelling & grammer I have seen in some posts, that some of the people who are hollering the loudest, might have trouble reading an ins. policy front to back and understanding it completely, as this process confuses many. 
Spend less time listening to talk radio:whistling


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## Sonny Lykos (Mar 11, 2006)

asbestos said:


> ​
> " in the events , or single event, of a temporary textile petrochemical treated incemancy protection device,being utilized in it's capacity as a hydrological barrier, is used, or a non-woven geo textile material, or a linear low density polyethylene film. The relavent standards as in ANSI 4598.138.5491 shall be considered as relavent in all cases with the following exceptions 3.B 12.65, Fb 2-4.6) certification of the relavent standards does not constitute, or shall not be deemed to constitue, relative to compliancy principals of WAC 296.653. a,c,d,f, or NMUS z359.1 that standards shall be considered in compliance with the relative standards themselves. "


The above, as with others are created "by" lawyers to CYA for those they are hired, and to assist criminal attorneys (these often become "criminal negligent" acts, in making their case to a judge or jury. 

With no legal jargon, Bone Saw did a superb job of CYA. He probably went beyond what I would have done, and what I would have done would have been insufficient had a disaster occurred. Everyone ere should learn from his example. 

BTW, when I used to do exclusively remodeling jobs, one of the first things I used to tell the customer - before they signed the contract - was that no party, or any other pending "social occasion" determines the completion date of their project. The "Process" does.

Look, we all screw up now and then. A big part of what makes our jobs difficult as business owners, is that we are legally responsible (in part or in full) not only for our selves and our own staff, but for subs and their staff, and venders and their delivery people. All we can hope for is that when we do or others screw up, it does not hurt or kill anyone, and that any costs involved are small. So on a daily basis, each of us roll the dice many times each hour.


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## ApgarNJ (Apr 16, 2006)

I would be going after the framing sub and his insurance company before i shell out 80k. 
I'm just glad my general liablity insurance isn't 35,000 a year!!!! 
anyone elses that high? what state do you live in?

insurance companies, no matter what type of insurance are just out to make money, and as much as they can, and the customer always gets shafted no matter what, there is always some small print somewhere in the hundreds of pages they give you, that most don't read, that they can basically deny you coverage because maybe you ate at the wrong place for breakfast, the day you had a claim. it's sad that we all pay for something, that when we do need it, isn't really on our side, nor will it cover us, and if it does, then they drop you or double your premium.


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## Bone Saw (Feb 13, 2006)

asbestos said:


> I guess bone saw would have read that *before* he let them start work.*Then* held up the project for a week while they got a ruling on the matter. I Just think some of those comments are overly nasty. I would also guess that by some of the spelling & grammer I have seen in some posts, that some of the people who are hollering the loudest, might have trouble reading an ins. policy front to back and understanding it completely, as this process confuses many.
> Spend less time listening to talk radio:whistling


way off target, not even hitting paper. Hey Professor, why don't you reread the thread a few times and ponder it while you're sit'n on the can next time, you wanna take a jab at me bigshot, fire away:thumbsup:


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