Working with Restoration Networks

If you have read my columns in R&R over the years, you know I complain and warn a lot about the coverage problems with the liability insurance policies sold to restoration firms.

If you have read my columns in R&R over the years, you know I complain and warn a lot about the coverage problems with the liability insurance policies sold to restoration firms. It irks me to see a widespread and persistent problem with glitchy insurance coverage in the restoration business when the fix is cost-free. Such is the case with “additional insured” endorsements on general liability insurance policies sold to restoration firms who work with direct repair networks.

The insurance specifications of the informed networks are drawn up in such a way that the insurance specifications make it hard for you to be fundamentally uninsured for what you do for a living. There is nothing fancy in the insurance requirements in the networks; their goal is to make sure you are insured for the work you do.

Restoration contracting networks have a vested interest in your liability insurance coverage. In your contract with the network, you have agreed to indemnify the network for any liability claims the network may become involved with as a result of something you did or someone thinks you did to cause them damages at a job site. To back up your unlimited indemnity obligation, the networks ask you to purchase liability insurance that makes the network an additional insured.

There are significant risks in the restoration business. Every year, ARMR Network gets a claim approaching a million dollars where a restoration firm has done something to cause damage on a job site. For example, we are on our third burned down house (last year it was three condos) allegedly caused by the restorer. (As a side note, it’s a good idea not to allow employees to smoke anywhere near a job site.)

Then there was the neurosurgeon who fell through the ceiling drywall while performing an unauthorized and warned-against inspection of the water remediation going on in the attic of a home. A rafter broke the fall of the male homeowner who, as you can imagine, was quite injured when the fall was broken. The medical bills and loss of earnings cost over $500,000. As a result of the fall, the wife wanted $300,000 for several reasons, including emotional distress. Lesson learned: restoration firms can get big liability claims on $6,000 jobs.

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