What to Expect from Changing Contractor Costs
The global pandemic brought many changes to the construction and builders industry. Here’s what to expect in 2021.
The global pandemic brought many changes to the construction and builders industry. Here’s what to expect in 2021.
When running a business, there are so many things to keep track of—especially considering the COVID-19 hullabaloo we’ve experienced over the past nearly two years. Various types of insurance, Small Business Administration (SBA) loan requirements… the list goes on.
An important topic that continues to change, however, is Economic Injury Disaster Loans (EIDL) and the subsequent need for hazard insurance if it is collateralized. This brings up many questions, likeÂ
Each of these questions and more is answered in this article: Economic Injury Disaster Loans (EIDL) Hazard Insurance: Your Full Guide.
Let’s dive in.
EIDLs are “the primary form of Federal assistance for the repair and rebuilding of non-farm, private sector disaster losses” administered by the SBA. “The disaster loan program is the only form of SBA assistance not limited to small businesses.”
Over the summer, many small business owners received an alarming email from the EIDL program through the SBA.
As part of the EIDL requirements, you must have hazard insurance in order to apply for the EIDL loan. In the email from the SBA sent earlier this year, individuals were informed that those who had received the EIDL loan, must present proof of insurance in order to have their loans forgiven.
Here’s a look at what the email said.
The Email Stated:
“The SBA is launching a new round of EIDL Advances – called Targeted EIDL Advance – which provides eligible businesses with $10,000 in total grant assistance. If you received the EIDL Advance last year in an amount less than $10,000, you may be eligible to receive the difference up to the full $10,000. The combined amount of the Targeted EIDL Advance and any previously received Advance will not exceed $10,000.”
“Businesses eligible for the Targeted EIDL Advance must meet ALL the following eligibility criteria:
The SBA said loans won’t be forgiven unless you have proof of insurance coverage. If you’re looking to check which COVID-19 loans are forgivable, visit this list.
“The Small Business Administration is a lender. Just like any other lender, the SBA is trying to protect their loan’s collateral from unforeseen circumstances,” says Naomi Bishop on hazard insurance. Therefore, all borrowers must obtain hazard insurance within 12 months of loan approval. Additionally, coverage must be maintained throughout the life of the loan.
Additionally, when applying for a loan, you guarantee a loan by offering assets as collateral. For example, financial (i.e. cash and cash equivalents), physical (real estate), vehicles, and so on.
If you then default on an SBA loan, the lender has the right to seize and sell assets as repayment. Even others’ collateral may be at risk if they signed a guarantee on the loan. For this reason, insurance is crucial to keeping your business and others safe.
Under the requirements for the EIDL, the SBA requires that your business has hazard insurance to cover 80% of the loan amount. Hazard insurance is a term for coverage that may be included within several different types of property coverage.
If you have any kind of business property insurance, you are likely covered. In fact, commercial property insurance is considered hazard insurance. This coverage protects your company’s physical assets, like buildings, furniture and equipment, supplies, computers, inventory, customer’s goods, signs, fencing, and even lost income from damage or loss.
The SBA does not allow personal hazard insurance to be considered for loans. Business auto insurance is also not allowable coverage for this requirement.
Effective September 8, 2021, many updates were made to the COVID EIDL program. All of which can be read in full here on the SBA website.
The impact of the primary policy changes include:
As previously mentioned, the SBA requires that at least 80% of your loan amount is covered with hazard insurance. It may be beneficial to have 100% of your business property value covered with hazard insurance. If you received EIDL funds without coverage, you should contact your insurance agent as soon as possible.
There are a few other rules related to the insurance coverage that the SBA has stated:
The premiums that one pays for hazard insurance is dependant on several factors, including:
Although this is not an end-all-be-all formula, for homeowners, the annual cost of hazard insurance typically costs between 0.25% to 0.33% multiplied by the purchase price of your home.
Hazard insurance doesn’t have to cost an arm and a leg. By comparing rates with the help of Competitive Edge Insurance, you’re sure to get the best deal for your business while making sure you stay compliant with the SBA’s requirements.
Curious about the difference between hazard insurance and high-risk insurance? Competitive Edge specializes in high-risk insurance— learn “What Classifies High Risk.”
Picture this scenario: You’re at a construction site and a worker falls off the roof and falls and breaks their leg onto floor tiles, also breaking the tiles. What would be covered in that situation, the leg or the tiles?Â
Workers’ compensation insurance are policies that provide medical benefits and wage compensation to workers injured on the job, in exchange for eliminating their right to file a lawsuit against their employer’s negligence.
Workers’ compensation benefits are designed to help employees if they are unable to work, cover medical expenses, as well as other expenses and rehabilitation costs associated with disability or illness. As you look to explore workers’ compensation options, it’s important to look for one that provides adequate coverage and compensation for your employees.
When you invest in a properly designed policy, it ensures you and your employees remain financially secure. It’s also important to look at the specific benefits that are offered within your policy. Typical workers’ compensation insurance policies cover medical benefits.
So, the worker’s comp covers the worker’s injury for falling off the roof.Â
Specific workers’ compensation laws vary depending on your state; however, the most common compensation states that require workplace injury insurance include the following:
One helpful way to understand this scenario is knowing the difference between performance and payment bonds.
In simple terms, a payment bond enforces that everything must be paid once a project is completed. Payment bonds are also surety bonds and are required for most state projects based on the Miller Act.Â
The Miller Act was passed by the U.S. General Services Administration Public Buildings Service (GSA) with the intention to explain how payment bonds protect subcontractors and suppliers.
The GSA responds to any reports of nonpayment, following the legal action needed and protected by the Miller Act. The GSA states that “the Miller Act requires that prime contractors for the construction, alteration, or repair of Federal buildings furnish a payment bond for contracts in excess of $100,000.”Â
Payment bonds additionally play a major role in construction. As an insurance company, we have relationships with carriers who understand the specifics of construction risk and can provide better solutions, better prices, and more comprehensive coverage—even for hard-to-place and high-risk companies.
The main differentiator between payment and performance bonds is that a performance bond ensures the employer is satisfied with the job. While both are surety bonds, performance bonds can be helpful in industries apart from construction.Â
A performance bond, according to Investopedia, “ensures the completion of a project. Setting these two together provides the proper incentives for laborers to provide a quality finish for the client.”Â
Any type of bonding will cover e tiles or building materials that were broken.
If an employee falls off the roof and hurts their leg and breaks the tile, the Workers comp covers the worker’s injury for falling off the roof. Bonding covers the broken tiles from his attempt not to fall off the roof.Â
The first step is to show us under the hood so we can help you find the right carrier and coverage to protect your business today and always.
Read about Worker’s Compensation for Independent Contractors here.Â
At Competitive Edge, we specialize in high-risk insurance. We often get the question, “What is high-risk insurance, and how do I know if I need it?”
Well, the answer is, if you’re a small business owner, general contractor, or even car owner, you likely need high-risk insurance. Depending on the industry you’re in, however, it can be difficult to fund coverage or losses.
There are a couple of ways to identify what classifies high-risk insurance.
Investopedia defines risk class as, “A group of individuals or companies that have similar characteristics, which are used to determine the risk associated with underwriting a new policy and the premium that should be charged for coverage.”
There are some main points that are needed to understand the risk that is associated with coverage:
Once you determine if you qualify for high-risk insurance, there are additional factors that will determine your premium. These might include:
One example of a scenario of hard-to-place insurance is from our very own founder, Brenda Jo Robyn of Competitive Edge Insurance. Brenda Jo had to pay an extra $15,000 in order to get her directors on board for her project.
If you have had excessive losses, shock loss, or are a startup (tech and service), it can be challenging to get professional liability coverage. There are, in fact, some extreme costs associated with high-risk coverage.
So, even the professionals have dealt with the difficulties and hoops that surround high-risk insurance (trust us, we get how frustrating it can be to navigate). That’s also why we’re here to help!
Competitive Edge Insurance can help you perform a comprehensive review of all your risk exposure.
Reach out today for more information from our experts on high-risk insurance!
As you may know, most states require employers to have workers’ compensation insurance. These insurance policies can help recover most of your employee’s lost wages while they recover from a work-related injury or illness.
It also helps to cover your employee’s medical expenses as it provides their family with death benefits if they, unfortunately, pass away.
Workers’ compensation insurance are policies that provide medical benefits and wage compensation to workers injured on the job, in exchange for eliminating their right to file a lawsuit against their employer’s negligence.
Workers’ compensation benefits are designed to help employees if they are unable to work, cover medical expenses, as well as other expenses and rehabilitation costs associated with disability or illness. As you look to explore workers’ compensation options, it’s important to look for one that provides adequate coverage and compensation for your employees.
When you invest in a properly designed policy, it ensures you and your employees remain financially secure. It’s also important to look at the specific benefits that are offered within your policy. Typical workers’ compensation insurance policies cover medical benefits.
Specific workers’ compensation laws vary depending on your state; however, the most common compensation states that require workplace injury insurance include the following:
Accidents happen. It’s part of life. It doesn’t matter how safe your business is, there’s always the chance an employee will get sick or injured on the job. For this reason, nearly every state requires business owners to have coverage for their employees. Different states, however, have various regulations.
Ensure you have an expert on your team to help understand what your specific business needs are. For example, if your business is in California, you are required to obtain workers’ compensation insurance even if your business is as small as just one employee. In Florida, however, you need this coverage if you have at least four employees.
Signing up for workers’ compensation depends on the location of your business. Typically, states recommend you purchase workers’ compensation insurance through a private insurance company, while others may require you to buy it through a state-run insurance fund.
It’s also important to understand the cost associated with investing in workers’ compensation insurance. The risk associated with your specific business will determine the cost of your insurance payments. This all sounds pricey, but remember: the costs associated with not having workers’ compensation insurance might be the motivation you need to start considering your options.
Without workers’ compensation insurance, you put yourself and your business at risk of fines, and could even face potential jail time for not complying with regulations. If an employee runs into a problem that would have been covered by workers’ compensation insurance, you may be responsible for covering their expenses, and you may also open yourself up to litigation.
Every contractor needs general liability insurance. While the law does not require it, it is considered best practice to ensure against the kinds of injuries and lawsuits general liability is targeted to.
Large contractors may own commercial buildings that require property insurance, where smaller contractors or those with a specialty may need different coverage.
At Competitive Edge, we don’t claim to know your needs until we talk to you. What’s right for one company may not be a choice that meets your needs. Even if you have suffered a shock loss, large claim, or lawsuit, and find that your options have narrowed, we can work with you.
The first step is to show us under the hood so we can help you find the right carrier and coverage to protect your business today and always. Contact Competitive Edge Insurance today for more information about high-risk coverage today!
Hard to place insurance is not impossible to place.
Although being a General Contractor (GC) and Construction Manager (CM) may sound like the same type of position, the difference is often overlooked in the industry. The difference between positions equates to a difference between the type of construction insurance needed.
A General Contractor “agrees to build the entire project—they’re the party ultimately responsible for the timely and proper performance of the work for a set price.”
The general contractor isn’t doing the manual labor at the job site, but instead managing the subcontractors who do.
In terms of insurance as a general contractor, general liability insurance is the type of high-risk coverage you should be looking toward. With construction coverage, there are specific risks to be made aware of, including:
On the other hand, a Construction Manager, “is a consultant hired by a developer or property owner to manage and oversee the performance of contractors that they’ve hired. The developer, owner, etc. hire each of these contractors directly.”
When you’re a construction manager, the type of insurance that will give you the best coverage is professional liability insurance.
The main difference between a GC and CM is the legality behind their hiring process, including coverage. The CM is hired, for lack of a better word, as a consultant whereas a GC is given a distinct payment with the job fully in their hands. The construction business needs to be protected with high-risk coverage, and Competitive Edge specialized in construction coverage.
At Competitive Edge Insurance, we work with insurance carriers across the country to place all types of business coverage. We are always seeking out new insurance companies to write hard-to-place and high-risk business insurance.
Don’t let cancellation dissuade you from finding comprehensive coverage. We can help! Learn more by connecting with Competitive Edge Insurance today.
The emerging cannabis market has created a new space for industry coverage. There are, however, both general and unique risks of cannabis insurance that shouldn’t be overlooked.
Let’s talk about the risks of cannabis insurance and what coverage is available to keep your business protected.
Claims can vary, but some of the most common in the cannabis industry include:
Moreover, The National Association of Insurance (NAIC) acknowledges that companies might need to reevaluate their coverage when it comes to cannabis and hemp. With the rising popularity of different forms of cannabis (for example, edibles), there are mental effects that need to be accounted for with insurance risk.
NAIC claims that products like edibles “increase the risk of product liability and safety recalls. The psychoactive effects of CBD raise the risk that products may be deemed mislabeled, misrepresented, or harmful.”
Research shows that young people have shown more interest in illicit drug use in recent years, which could change the insurance services and risks available.
Some additional and unique risks associated with cannabis coverage to consider include:
So, what insurance does your cannabis need to combat these risks? Below are three of the best ways to protect your cannabis business.
Cannabis and CBD products require custom product liability policies for their:
This coverage applies to any business bringing a product to market. If an incident were to occur, these custom product liability policies kick in to help defend your company against claims and allegations and to pay damages if your business is found liable.
Considering the potential claims that can be made against your business (listed under “Risks of Cannabis Insurance”), product liability insurance is an essential part of your cannabis coverage.
Similarly, you may want to consider product recall insurance, which can cover the costs of removing a defective product from the market and further prevent third-party claims.
Lastly, your cannabis business might consider EPLI.
Employment Practices Liability Insurance (EPLI) is insurance that provides coverage to employers against claims made by employees.
EPLI policies typically extend coverage to the following:
According to Amtrust Financial, the below are also common employer missteps that may be covered:
The fact of the matter is that some industries are more susceptible to these types of claims than others. Highly susceptible industries include the cannabis industry as well as healthcare, professional services, restaurant, food services, retail, and manufacturing.
Again, EPLI claims can be detrimental to businesses of all sizes and types. This policy helps protect against many kinds of employee lawsuits which is why it’s important to invest in coverage, especially for a client-facing business such as cannabis.
Naturally, carriers have their own best interests at heart and only cover the safest bets to protect themselves. At Competitive Edge Insurance, we build your case with the carrier to ensure that you get the right coverage at the best price based on your real-world conditions.
Read on if you’re wondering the difference between cannabis and hemp insurance, then get in touch with our team today.
I’m a small business, do I really need insurance?
In short, yes. Insurance is needed for all transactions of business where outside parties are involved—big and small. Even though it might be tempting to opt-out of insurance, the risk is much greater (and expensive) if you’re not insured.Â
Picture this.
Your small yoga studio is starting to thrive as COVID-19 restrictions lift. More people are signing up for classes. Hooray, this is good news! Then a too-complicated pretzel move goes haywire and now you’re being sued for malpractice. And to top it all off, you don’t have insurance.
In retrospect, you wish you would’ve gotten Health and Wellness Insurance. Again, the risk is far greater than paying for small business insurance.
Insurance jargon can be intimidating, which is why we’re here at Competitive Edge to help!
There are SO many options of coverage to look into as a small business:
Insurance is not one-size-fits-all. As a small business, there are differences between the type of coverage that might work best for you. This can differ depending on what state you reside in, what industry you’re trying to insure, and more.
Even if your business is made of a small group of employees, business insurance is essential. If anything happens in office (injury, wrongful termination, emotional neglect), you will instead pay for it out of pocket.
Our team is dedicated to your safety, security and ongoing success. Our clients stay with us for decades because we have their business’ best interests at heart and the depth of knowledge and experience to protect and insure them no matter what the market conditions. Contact Competitive Edge today for more details about small business insurance!
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