It was Oct. 1 of this year when a fence owner discovered his general liability claim was denied by the insurance company. The accident occurred on August 10, when one of his employees accidentally damaged part of a house in Orange County, California.

The owner of the fencing company began reviewing his current general liability policy and read it from front to back. This was the first time he noticed that he had a residential exclusion in his general liability policy. The owner had no idea that he was not covered for this type of work.

Can this happen to you and your fence company? Yes, it can.

In recent years, many insurance companies have been keeping premium pricing competitive by eliminating necessary coverages. However, these necessary coverages are vital to your type of work.

Many insurance companies have deleted or changed important coverages in the past five years. These eliminated coverages include, but are not limited to:

• Residential exclusion – This endorsement does not allow the contractor to work on any type of residential building including single-track homes, apartments and single-family homes.
• Narrowing of the additional insured endorsement wording – Insurance carriers have tried to narrow this wording to give the insured less coverage. This coverage has been narrowed for all contractors.
• Construction warranties (Classification Limitation Endorsement) – Many insurance carriers use a warranty on policies to exclude any type of work the contractor does not exclusively list on the insurance application. For example, if a contractor completes an insurance application and states that they only install fences, they will not be covered for any other type of construction (carpentry, flooring, landscaping).
• Late notice of claims – In some states, courts uphold a carrier’s right to disclaim coverage for failing to report a claim or incident that may give rise to a claim as soon as practical. It is critical that a claim or incident be reported to your insurance carrier immediately after being notified a claim has occurred.

Regardless of your industry, liability exposures exist in every part of your operation and at every location. A proactive approach and periodical review of your insurance coverages can significantly mitigate your liability exposures. By preventing injury or damage to others and having all the necessary coverages you need, you can devote more time to helping your company succeed.

In the past five years, many AFA members have complained about their high insurance premiums and lack of coverage. Many insurance carriers have kept the premium pricing competitive, while eliminating necessary coverage.

The AFA has heard these complaints and has taken extraordinary steps to improve the insurance situation. Effective September 30, the AFA will provide its members the potential to lower their insurance premiums and receive the best possible insurance coverage available in the marketplace with an admitted insurance carrier.

Below are the advantages of the AFA Endorsed Insurance Program: 

• General liability, automobile, workers’ compensation, property/inland marine and umbrella written with an admitted A-rated company by AM Best.
• Zero-dollar deductible on the general liability, workers’ compensation and automobile (except $1,000/$1,000 comp/collision deductible) on all policies.
• No residential exclusion.
• Ability to receive certificates of insurance within three hours of the request via email.
• Policies specifically tailored for AFA members.
• General liability per project with an aggregate of $5,000,000.
• Broad and comprehensive coverage:
• Completed operations for additional insureds;
• General liability, workers’ compensation and automobile liability waivers of subrogation (blanket waiver of subrogation); and
• Primary and non-contributory endorsement.

What is the most important thing you need before you leave for a jobsite? Hammer? Saw? Screwdriver? No. You need a certificate of insurance. Before general contractors are allowed on a jobsite, they want to see a certificate of insurance confirming you have the required insurance coverages, limits and correct additional insureds.

If you are allowed on the jobsite without a certificate of insurance, you will need to show the general contractor/owner a certificate of insurance before you get paid. By joining the AFA Endorsed Insurance Program, AFA members will be able to receive certificates of insurance within three hours of the request.