You read about mega liability verdicts and settlements but aren’t too concerned, thinking you have a small or mid-size construction operation or artisan business. The big payouts are against large companies with deep pockets. But while $10 million–plus verdicts may grab headlines, more and more smaller contractors are facing settlements and verdicts that exceed $1 million or more, often from a single claim. Without the proper insurance program in place, you can end up paying out of pocket for a major loss or, even worse, be forced to shut the doors to your operation.
That’s why General Liability insurance augmented by an Excess Liability policy helps protect you from catastrophic claims that can quickly exceed primary limits and threaten the financial stability of your business.
The Litigation Landscape Today
The legal environment facing construction and artisan contractors has changed significantly over the past several years. Lawsuits are being filed more often, driven in part by third-party litigation funding, in which outside investors finance lawsuits in exchange for a share of any settlement or verdict. At the same time, aggressive attorney advertising on TV, billboards, social media, and radio encourages injured parties to pursue legal action even when fault may be questionable. As a result, claims that once might have settled quickly are now more likely to escalate, take longer, and cost more to resolve.
Juries are also awarding higher damages than in the past, including punitive damages meant to punish businesses rather than simply cover medical bills or repairs. Even routine accidents, like a slip on a jobsite or damage to a neighboring property, can turn into expensive legal battles. For contractors, this means claims don’t have to be extreme to become financially devastating. Defense costs alone can be high, and settlements can exceed expectations.
In today’s environment, having the right insurance structure isn’t about planning for the worst-case headline. It’s about protecting your livelihood from everyday claims that are becoming far more costly than they used to be.
Inside Your General Liability Policy
General Liability insurance protects your business against third-party bodily injury and property damage claims arising out of the work you perform.
- Bodily Injury: An injury, illness, or disease suffered by a person, including death.
- Property Damage: Refers to physical damage to tangible property, as well as any subsequent loss of use.
- Products and Completed Operations: Coverage is available for bodily injury and property damage after a project is completed, but only for work performed during the policy period.
- Medical Payments: Covers medical expenses for bodily injury caused by an accident that occurs within the policy period, typically with a limit of $5,000.
- Personal and Advertising Injury: Injuries caused by false arrest, malicious prosecution, unlawful eviction, the use of another's concept in an advertisement, copyright infringement, or the publication of anything that slanders, libels, or violates a person's right to privacy. This type of claim is uncommon in contractor General Liability cases.
Typical limits include:
- $1 million per occurrence: means the policy will pay up to $1 million for any single claim or accident, such as a single injury or property damage incident.
- $2 million aggregate means the policy will pay up to $2 million in total for all covered claims during the policy period, typically one year.
- $2 million for products/completed operations
What happens when a lawsuit exceeds $1 million?
Excess Liability Insurance Steps In
With an Excess Liability policy, you get an additional layer of coverage when your General Liability policy limits are exceeded. These increased limits help safeguard your business from potentially devastating claims for covered losses. For example, if you have a $1 million limit on your General Liability policy and purchase a $2 million Excess policy, you will have a total of $3 million in coverage. Once the limits of primary policy – your General Liability – are exhausted, the Excess policy will step in.
What Does the Excess Policy Cover?
An Excess Liability policy provides the same coverage as your underlying General Liability insurance. This includes claims of bodily injury, property damage, products and completed operations, and personal and advertising injury.
What Excess Liability Limits Should You Purchase?
CCIS provides limits of up to $5 million. The amount of limits you should carry will depend on the type of work you perform, the size and scope of your projects, your contract requirements, and the level of risk associated with your operations. Contractors working on higher-hazard jobs, larger projects, or projects with strict owner or lender requirements may need higher limits to adequately protect their business.
Land More Projects with an Excess Liability Policy
In today’s increasingly litigious environment, having the right Liability protection goes beyond basic coverage. When bidding on projects with higher risk or more complex operations, contractors are often required to carry higher Liability limits as a contract requirement. Excess Liability insurance helps you meet these contractual requirements while also showing project owners, general contractors, and lenders that you take risk management and financial responsibility seriously.
Get More Protection: Talk to the Construction Experts at CCIS
For more than 55 years, CCIS has been serving the insurance and bond needs of contractors. More than 200,000 contractors have turned to us to help protect their business. We’ve been recognized for our outstanding service and quality products. We are ready to help you be risk-ready.
Just call CCIS at (800) 432-2641 for a free quote.
Protect Yourself
Excess Liability insurance helps protect your business when a claim goes beyond your General Liability limits. Download our guide to see why Excess Liability is a smart, cost-effective way to add an extra layer of protection.
*NOTE: The insuring agreement in a policy sets out the covered perils, assumed risks, and nature of coverage that the insurance company provides to its insured in exchange for the premiums paid. Thus, the terms and conditions of the policy will dictate whether coverage exists and the nature of any potential benefits.