In most situations, an insurance claim is covered by a single policy. Occasionally, however, claims in the contracting industry can legitimately be covered by both a contractor’s own insurance policy and a project’s insurance policy. In these situations, it can be difficult to decide which policy to file a claim against. If you’re a contractor in Massachusetts, here’s a look at the advantages and disadvantages of filing such a claim with your own contractors insurance policy or a project’s insurance policy.
Should Massachusetts Contractors File a Claim Against Their Contractors Insurance or a Project’s Insurance When Claims Are Covered by Both Policies?
Filing a Claim Against Your Own Contractors Insurance Policy
When filing a claim against your own contractors insurance policy, other people working on the project aren’t directly involved in the process. They may be consulted by an insurer’s representative to help clarify what happened or determine the extent of any damage caused. They themselves, however, aren’t filing the claim, and their insurance policy isn’t involved in the claim.
This can help prevent tensions between you and others involved in the project from building up. Since the project’s insurance policy isn’t affected by your claim, the owner or general contractor who’s the policyholder of the project’s policy shouldn’t be aggravated by the claim. They’ll likely continue working with you as they have throughout the project thus far.
Keeping tensions from rising, however, comes at a cost. Filing a claim against your contractors liability insurance policy could cause an increase in your business’ future rates, because most insurers in Massachusetts consider past claims history when calculating premiums. In fact, just one claim might make your business’ contractors liability insurance rates go up for several years.
Filing a Claim Against a Project’s Policy
By filing a claim against a project’s policy, you may risk upsetting the policyholder owner or general contractor. Tensions may rise for a couple of reasons.
First, the owner or general contractor will have to be involved in the claim, since it’s being filed against their policy. Few people would like to spend their time dealing with an insurance claim, especially when they’re trying to execute a major building project.
Second, their business’ insurance premiums might increase in the future. Just as a claim might make your business’ contractors liability rates go up, a claim history will likely make a building owner’s or general contractor’s future insurance premiums increase. They might want your business to absorb this potential increase rather than their company.
If tensions rise working on a project together may become awkward, frustrating or challenging. There is a significant benefit to this option, though -- your business’ future contractors liability insurance rates shouldn’t increase. Since the claim isn’t being filed against your business’ policy, it probably won’t show up in your business’ claims history.
Talk with Your Massachusetts Insurance Agent Before Filing a Claim
If you have a claim to file, contact your independent Massachusetts insurance agent for help deciding which policy to file the claim against. An independent agent will be able to make sure that a claim can be filed against either your contractors insurance policy or the project’s policy. (Some claims may have to be filed against one policy and not the other, and others might require initially filing the claim against both policies and letting the insurers sort out coverages.) Assuming a claim can be filed against either policy, your independent agent will be able to help you think through the advantages and disadvantages of either option.