Contractors routinely bid for various construction projects. In most projects of any size, there are contract specifications that have been prepared either by an architect or an engineer. The specifications are comprehensive and generally include a significant section dealing with insurance and bonding requirements. In most instances, the insurance and bonding requirements are generally not licensed intermediaries (i.e. insurance companies and insurance agents). Many times, the architects and engineers prepare insurance requirements without the benefit of input by a licensed intermediary. In many instances, the insurance specifications can be one sided. This can present a problem for the unwary contractor.

Advice: Contractors are well advised to review, as far as possible in advance of the award date of the contract, the insurance specifications. Those specifications should be given to the contractor's insurance agent who can then work with the contractor's carrier/underwriters for purposes of determining appropriate coverages. An early determination can then be made as to whether or not the existing policies can satisfy the contract specifications. This means that the contractor must work with his or her agent in a timely manner. A contractor who does not involve the agent and insurance company runs significant risks of becoming trapped in a situation where there is no insurance coverage for a liability of the contractor.

Written By: Independent Insurance Agents of Wisconsin

Legal Counsel Tim Fenner

December, 2007