General liability insurance covers bodily injury, property damage, personal injury, and advertising injury arising out of your operations, products, and premises. You've got it, you pay your premiums, so you're covered, right? Maybe.
"I can't tell you how often a client of mine hasn't read his insurance policy," Dallas construction attorney John Sloan says. "They talk to the agent. They get a feel for what's covered. But they never really read it."
Sloan advises remodelers to spend the 20 minutes it takes to read their policy, paying particular attention to exclusions. For example, he says, many insurers are now adding mold exclusions to policies. "You have to buy separate insurance and it's pretty expensive."
Remember also that while damage caused by faulty materials or workmanship is covered, the "work product" itself isn't. In other words, if the roofing you installed leaks, your insurance company will pay to repair the water damage, but not the roof itself.
Sloan also advises remodelers to be particularly vigilant with subcontracts. Good contracts with subs indemnify the general contractor for any damage occurring on the job and carry insurance provisions that name the general contractor as an "additional insured" under the contract. That way, you or your insurance company will not bear the burden for faulty work by a subcontractor.
While reading their policy, says Sloan, contractors should take notes then get the insurance agent's opinion about anything that's still not clear. "If you can get a written explanation from your agent of what any potentially unclear policy provisions mean," says Sloan, "you'll be much better off should a coverage dispute arise."
