Builders Risk, Intrafamily Lawsuits, ‘Save 15%’ Myths

It is not uncommon for a homeowner to serve as his or her own general contractor when building a new home. When doing so, there is an exposure to claims made by contractors and their employees if injured during construction. In fact, such claims can arise regardless of the homeowner’s status as general contractor or owner. Does the HO policy cover these claims or is workers’ compensation coverage needed?

To answer the question above, depending on the situation, we’d say “maybe/possibly/probably.” But, seriously, it all depends on the state’s workers compensation laws with regard to whether or not a homeowner “needs” to buy WC coverage. On the other hand, even if he doesn’t have to, it doesn’t mean that buying it isn’t a good idea; even where WC isn’t mandated by law, it is often still a good idea to purchase it.

In many (if not most) states, a general contractor and/or property owner is liable for WC benefits to the employees of uninsured subs. Some (if not many) states exempt someone building their own home from this requirement.

Again, though, despite any legal requirements, there are a number of reasons why it may be inadvisable to rely on homeowners insurance when building a home. To explore those reasons, go to the Big “I” Virtual University.

You’ve seen the commercials:

“Call now and save 15% or more on your car insurance!” Unfortunately, when someone is selling substandard coverage or service, their only marketing ploy is price. So, their advertising campaign leads consumers to believe that the only difference between insurance companies is price. Worse, their “save 15%” mantra implies that the agent is totally worthless in the transaction and disregards their exorbitant advertising budgets. Here’s proof that you can’t compare apples to oranges (particularly when the apples are rotten)…

An agent wrote an insured’s HO policy, but his auto was insured with a “save 15%” company. Here’s the claim: “Our insured’s auto was stolen and destroyed. The carrier denied the claim because his keys were in the car and there was no sign of forced entry. According to the adjuster, the policy does not cover theft without evidence of forcible entry.”

The ISO PAP has no such prerequisite for theft coverage. However, this carrier’s policy did require evidence of forcible entry in order to trigger coverage. Sadly, it appears that the insured is out almost $20,000…but he did (allegedly) save 15%!

A quick look at the insurer’s website revealed their slogan: “An Insurance Program with a Difference.” No kidding! So, the insured was warned. The website indicated that they insure nonstandard exposures and that their policy forms are “nontraditional.” That certainly appears to be the case.

Want to learn more about competing with the “save 15%” companies? Mark your calendars to check out the webinar area of the Big “I” website in March for a new national webinar on this subject, to be held April 10.

If a family member does something negligent that injures another family member, can the injured party file a liability claim under their common policy? Well, sometimes they can and sometimes they can’t. It depends on the type of policy and/or statutes in the state of jurisdiction.

The ISO homeowners policies have a clear exclusion for liability claims or lawsuits by an insured.

The ISO personal auto policy doesn’t have a similar exclusion, though there is an endorsement that accomplishes the same goal. This type of exclusion has been upheld by courts in a number of states, though in at least one state, when the exclusion was upheld for liability coverage under a PAP, coverage was found under the uninsured motorists section of the policy. For more information on intra-family lawsuit coverage, visit the VU.