Insurance Needs for Cleaning, Drying, & Restoration Contractors
In today’s world of insurance the insurance needs of cleaners, dryers, and restoration contractors is more confusing than ever.
So whats the history behind your insurance needs? In the early 2000's insurance company's being inundated by mold and bacteria loss claims where paying far to much in claims to have the Cleaning Drying and Restoration contractors business be profitable for them to provide coverage to. So basic risk management principles applied, either raise rates on the front end to make up for the amount of money they were loosing by paying out for claims or clean up the back end and payout less in claims. By 2006 the insurance industry chose the later and decide to create a universal mold exclusion, washing their hands of the industry and payout that associated with the huge rise in mold and bacteria claims. The Universal Mold Exclusion was thrown into all commercial General Liability and Property policies by 2006. Most insurance policies will read:
This insurance does not apply to:
Fungi Or Bacteria
a. “Bodily injury” or “property damage” which would not have occurred, in whole or in part, but for the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of, any “ fungi” or bacteria on or within building or structure, including its contents, regardless of whether any other cause, event, material or product contributed concurrently or in any sequence to such injury or damage.
b. Any loss, cost or expenses arising out of the abating, testing for, monitoring, cleaning up, removing, containing, treating, detoxifying, neutralizing, remediating or disposing of, or in any way responding to, or assessing the effects of, “ fungi” or bacteria, by any insured or by any other person or entity.
What this exclusion does to the General Liability policy is it basically give any insurance company the right to walk away from a loss at anytime they feel the loss involves fungus/bacteria I.e.: Mold and category 3 water.
Anybody who is IICRC mold- certified knows that mold spores are omnipresent in the atmosphere. The first part of the exclusion becomes affected because mold is already present at the work site. The second part of the exclusion is what we in the insurance industry refeer to as the "you cannot be in the water restoration mold remediation or the ainti microbial cleaning business" part of the exclusion. This part of the exclusion states under the words in section B of the exclusion that any claim will not receive coverage ounce a contractor shows up to a job to "in any way access or respond to fungus or bacteria."
Wow! That’s a pretty far reaching exclusion. For example as soon as the contractor shows up at a job to access or respond to Category 3 water loss or to access the presence of mold, which we know is already present, technically the GL policy is void when he or she walks in the door. If the contractor causes a fire on a Category 3 water loss mold accessing job, the fire would be excluded even if there was no exposure to fungus or bacteria. That is because it is the job itself, not just a loss resulting from exposure to the pollutants that is excluded under section B of the fungus/bacteria exclusion endorsement.
The only way to fix the coverage gaps caused by the fungi or bacteria exclusion in the General Liability Policy that is sold to restoration contractors is to purchase a combined General Liability and Contractors Pollution Liability insurance policy from the environmental insurance market. Contractors seeking a state-of the-art solution for their liability insurance needs can now go to any independent insurance agent in the U.S. and access the customized insurance package that is essentially free of fundamental design flaws. Allstate insurance agents also have access to customized insurance programs for cleaning and restoration contractors but it requires a home office referral to access the product line. Good quality insurance for the cleaning and restoration business is readily available and accessible.
ARMR.Network is the premier insurance brokerage firm specializing in the restoration contracting industry. With the introduction of the universal mold exclusion, insurance and risk management for the restoration contractor became very complex. We have exceptionally qualified brokers working in offices coast to coast to assist you. We work through your local insurance agent. All of our insurance products meet Alacrity and Crawford Contractor Connection Specifications and with one call we can have a bench mark price for you based off of your projected annual revenues in seconds and with the completion on a simple application we can have a formalized quote for you within hours. Give the ARMR.Net team a call today to get custom insurance for your restoration business.
American Risk Management Resources Network, LLC
7507 Hubbard Ave, Suite 200
Middleton, WI 53562
~ Better Insurance By Design