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Do Contractors NEED Commercial Umbrella Insurance | You Ask, We Answer - YouTube
Channel: ALLCHOICE Insurance
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- Should contractors carry
commercial umbrella insurance?
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Well, in this video,
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we are going to look at the
reasons why they should,
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as well as why they should not,
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and for all of you out there
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who aren't owners of
contracting businesses,
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you should stick around, too,
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'cause I'll tell you why
you need to make sure
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that anyone that's doing work for you,
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a plumber, electrician, you name it,
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anyone that's doing work on your house
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needs to carry an umbrella policy as well.
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We'll get all this coming up next.
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(intense music)
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Hey folks, Jack Wingate here,
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and on this channel,
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we help individuals,
families, and businesses
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with tips, tricks, and strategies
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to save money on your insurance,
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to understand your
insurance coverages better,
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and to keep you informed
of what's going on
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in the insurance industry,
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and on today's video,
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we're gonna look at whether or not
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contractors should carry
commercial umbrella insurance.
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Now, if you've made it this far,
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and you are not a contractor
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or own a contracting business,
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I suggest that you look up here
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with a link to our playlist
for You Ask, We Answer,
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there's gonna be a lot of
answers to common questions
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that most people have about insurance,
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but I do suggest that you stick around
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because I'm gonna give a tidbit to you
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if you own a property, a home,
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rental property, what have you,
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that might save you money in the end,
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but before we go there.
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Let's discuss what an umbrella policy is.
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A commercial umbrella
policy for a contractor
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sits over and above
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that contractor's underlying policy,
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so in general,
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most contractors carry a
general liability policy
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that covers, you know, them,
in case they get sued for
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work that they do.
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Most will carry a business
auto insurance policy,
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just like a personal
auto insurance policy,
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it covers their vehicles,
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and more importantly,
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the liability that comes
from those vehicles,
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and then most contractors
have workers compensation
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and employer liability coverage,
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and that's one policy that most people
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just refer to as workers comp.
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So, contractors can
have an umbrella policy
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as long as they have one
of these other policies
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to sit underneath.
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So, let's look at two reasons
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why contractors
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should have a commercial umbrella policy
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In the first one,
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and the reason that we
see most often is this.
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They're required to by contract.
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Now I'm not talking about a contract
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for them to actually have their license,
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I'm talking about
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they want to do business
with an individual,
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with a larger general contractor,
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you name it,
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but as part of the contract
or the worker agreement,
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the person that they're doing work for
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requires them to carry
certain limits of insurance.
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Now, we see this all the time
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with larger organizations.
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In fact, the requirements they have
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are really, really stringent,
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and so, this is where we
see a lot of contractors
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being made to purchase
these umbrella policies.
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So, the number one reason,
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they're required to.
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The second reason, and
this is the reason that
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I personally like it best as
a risk management professional
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is that it protects
them from large losses.
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You know, the whole purpose
of an umbrella policy
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is in case something really goes wrong
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and the underlying policy
limits are exhausted.
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That's when the umbrella
policy would pick up.
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So, let's look at an example
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of where this would come into play,
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and this is an actual real world example
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that I had the privilege,
I guess you would call it,
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to watch unfold.
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This was not a client of mine,
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but I did get to see this
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this video
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sent to me by a claims adjuster.
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There was a contractor,
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sand and gravel hauler with a dump truck.
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The driver takes the truck
home for the evening,
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parks the truck on the street,
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engages the e-brake,
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does everything right.
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At some point in time,
the e-brake releases,
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and the truck starts
rolling down the hill.
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As it rolls down the hill,
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it runs into three or four vehicles
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before hitting an intersection where it
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hit another vehicle
that actually was moving
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and had passengers.
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So, that claim ended up coming
up to about $1.5 million.
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Most contractors carry a million dollars
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of business auto liability,
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so that leaves that contractor
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with a half a million dollar deficit
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that they have to come up
with out of their pocket,
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or in this case, make sure that
they had an umbrella policy.
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The umbrella policy was gonna kick in
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and pay that extra half a million dollars
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making sure that that
contractor was made whole.
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Now, that's a really out there example,
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but it did happen.
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Now, as a homeowner or a property owner,
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you need to make sure that anyone coming
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on your property to do work
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is insured properly,
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and I'm gonna give you one quick example.
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Let's say you have a plumber
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that comes onto your
property just to fix a sink.
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They walk out onto the deck to,
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you know, cut some pipes, whatever,
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and they slip and fall down the steps.
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Now, it just so happens,
your deck is like mine
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and it's on the second story,
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so they go down a whole flight of steps,
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injure their back, they're gonna
be out of work for forever.
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Well, you say, they've got workers comp,
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they should be okay,
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and that is true, the
employer has workers comp,
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that person's medical bills,
wages, are gonna be covered,
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but, that employee decides to sue you
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because they said your deck was unsafe
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and actually caused the accident.
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Well, you are going to
have to go up against
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that contractor and sue them
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under what they call the employee,
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in the employer's liability
portion of their workers comp,
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and that's gonna make you whole,
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so making sure that people
that do work for you
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have enough insurance, and I suggest
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that they have an umbrella
policy is crucial.
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Alright, so, the reason
that most contractors
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are probably still watching this video
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is for this reason right here.
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The reason contractors should not
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carry a commercial umbrella policy,
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and I've got some bad news for you.
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The only reason a contractor
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should not have a
commercial umbrella policy
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is 'cause that contractors
no longer in business.
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I don't care if you're a large contractor
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or small contractor,
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the possibility that
you get hit for a claim
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larger than a million dollars,
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let's face it, it exists.
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If you are in a automobile accident
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with your business auto,
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and you injure someone, you
kill someone, heaven forbid,
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that lawsuit is gonna be
above a million dollars,
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so I suggest any contractor
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regardless of your one person shop
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or a 50 person shop,
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you need commercial umbrella insurance,
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and let's look at it,
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a small contractor,
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the cost for a commercial umbrella policy
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is gonna be, you know,
between 450 and $750 a year.
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It's relatively inexpensive.
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Hey guys, I hope that you
have gotten some value
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out of today's video.
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I know it's a little
bit of an obscure topic,
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but I would highly suggest
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that you subscribe to our channel,
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take a look at our You
Ask, They Answer playlist,
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and until next time,
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we'll see you.
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