What’s the deal with “surplus lines” insurance?
By Jeff DeHaan, Montgomery and Graham
For many contractors, liability insurance continues to be expensive and, in some cases, difficult to obtain. Our agency has insured a number of contractors who were cancelled by their previous “admitted” insurance companies. It seems like there is a second wave of insurance turmoil in the marketplace as even artisan contractors are being hauled into construction defect claims and insurance companies are pulling back in Oregon and Washington.
Almost every contractor that works on the “envelop” of buildings is being forced to buy insurance in the “non-admitted” marketplace of insurance companies, also known as “Surplus Lines.”
By law, your insurance agent must first attempt to place your coverage with a licensed insurance company. If unable to find a licensed company willing to accept the risk, only then can the agent turn to a surplus lines company. Surplus lines insurance companies are not regulated by the state. If the insurance company goes out of business, the State Insurance Guarantee Association will not cover any claims filed under the policy.
Surplus lines insurance contracts are more flexible than the policies of admitted companies. This means there can be greater restrictions placed on the policy, and some claim situations that an admitted policy will respond to will be excluded in a surplus lines policy.
There are times when the extra exclusions and restrictions in a surplus lines policy can make a very real difference in whether a claim will be paid. Our agency recently reviewed a general liability policy for an HBA homebuilder member that had multiple restrictive endorsements and exclusions that made me wonder if the company had any coverage at all.
Many HBA members have been dealing with surplus lines insurance for many years. Others are just being forced into that situation. The key is to have a long talk with your agent about what the surplus lines market means to your company and to be extra diligent about really understanding your insurance policies.
If you want more information, contact Jeff DeHaan, President of Montgomery & Graham Property & Casualty, at jdehaan@mg-pc.com or at 971-327-5793. M&G is an exclusive Benefits Partner of the HBA of Metropolitan Portland
By Jeff DeHaan, Montgomery and Graham
For many contractors, liability insurance continues to be expensive and, in some cases, difficult to obtain. Our agency has insured a number of contractors who were cancelled by their previous “admitted” insurance companies. It seems like there is a second wave of insurance turmoil in the marketplace as even artisan contractors are being hauled into construction defect claims and insurance companies are pulling back in Oregon and Washington.
Almost every contractor that works on the “envelop” of buildings is being forced to buy insurance in the “non-admitted” marketplace of insurance companies, also known as “Surplus Lines.”
By law, your insurance agent must first attempt to place your coverage with a licensed insurance company. If unable to find a licensed company willing to accept the risk, only then can the agent turn to a surplus lines company. Surplus lines insurance companies are not regulated by the state. If the insurance company goes out of business, the State Insurance Guarantee Association will not cover any claims filed under the policy.
Surplus lines insurance contracts are more flexible than the policies of admitted companies. This means there can be greater restrictions placed on the policy, and some claim situations that an admitted policy will respond to will be excluded in a surplus lines policy.
There are times when the extra exclusions and restrictions in a surplus lines policy can make a very real difference in whether a claim will be paid. Our agency recently reviewed a general liability policy for an HBA homebuilder member that had multiple restrictive endorsements and exclusions that made me wonder if the company had any coverage at all.
Many HBA members have been dealing with surplus lines insurance for many years. Others are just being forced into that situation. The key is to have a long talk with your agent about what the surplus lines market means to your company and to be extra diligent about really understanding your insurance policies.
If you want more information, contact Jeff DeHaan, President of Montgomery & Graham Property & Casualty, at jdehaan@mg-pc.com or at 971-327-5793. M&G is an exclusive Benefits Partner of the HBA of Metropolitan Portland
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