The high-risk, high-reward nature of the construction industry makes protecting your business assets tricky, but insurance coverage for your business can help soften the blow of a property damage or personal injury claim. You can’t predict what will happen on your project sites. Regardless of how many controls you have in place to prevent an accident, the worst-case scenario can manifest suddenly and without warning. In these moments, contractors are grateful for their insurance coverage.
The State of Florida requires all general and building contractors to have a general liability insurance policy covering $300,000 in bodily injury and $50,000 in property damage. Individuals cannot obtain a contractors license in Florida without first showing proof of insurance. In this brief article, the St. Petersburg construction attorneys at Cotney Construction Law will explain umbrella insurance and drop down coverage, a form of liability coverage that builds on your general liability policy to help fill in gaps in coverage.
Your general liability policy will help protect your business against legal claims of property damage, personal injury, and negligence, among others. This is accomplished by providing financial coverage when a claim is issued against the policyholder. In the construction industry, insuring an entire project site comprised of multiple subcontractors with differing policies can be a complex procedure. It may be difficult to tell where your coverage ends and a subcontractor’s starts. Umbrella insurance helps bridge the gap by providing additional coverage after your policy has reached its limit. When an umbrella policy contains a drop down clause, it automatically “drops down” to cover the expenses not covered by the general liability policy. Umbrella insurance may also be written to expand coverage on events that were not covered originally.
Limits and Gaps
Most general liability policies contain a limit based on the number of claims made as well as an aggregate limit defined by the total amount paid under a single policy. When either of these limits are reached, drop down coverage is activated to cover the policyholder. Without this type of expanded coverage, contractors would be forced to pay out of pocket once the limits of their policy have been reached. In the instance of catastrophic bodily injury or property damage, this gap in coverage could leave a contracting business in shambles.
Remember, all contractors in Florida must have some form of general liability insurance to legally perform improvements of any kind on real property. To learn more about your legal rights and responsibilities, consult an attorney from our St. Petersburg construction law office.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.