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president's letter

An overlooked cost of running a business

Martin Brookes
, NTCA President
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Is your business protected in the event of a worst-case scenario? This is a question that you should ask yourself every time your insurance policy comes up for renewal. Your needs may change as your business grows.
My good friend Lindell Lummer adapted this quote by Aaron Levenstein, an author who was a professor of Business Administration at Baruch College: “Insurance is like a bikini; it costs a fortune and covers very little.”
Risk is something that you should always take into consideration when bidding a project and preparing a business contract. The type of construction project should be one consideration when determining what insurance coverage you may need. For example, condominium projects may require additional coverage because a standard policy may exclude these types of projects. It is important to check the exclusions on your current policy to make sure that you have adequate coverage prior to submitting your bid.
Another consideration is the potential legal risk related to a slip-fall incident that could occur months – if not years – after the project has been completed. As the installer, you may be included in future litigation, therefore, it is important to make sure your policy includes protections against this type of long-term liability. Your exposure may continue for much longer than the duration of the project so be sure you have course of construction and general liability insurance as well as completed operations insurance coverage.
In some instances, an owner-controlled insurance program (OCIP) – also known as a wrap up insurance or “wrap” – may be mandated and may be beneficial to subcontractors. Make sure to look for this language in the bid package and allow for the costs associated with the policy. OCIP was once included only in larger commercial projects but because of widespread litigation, it is now recognized as another way to reduce liability risk on smaller residential projects.
Finally, small and large companies alike are at high risk for cyber attacks like data breaches that can result in devastating damage. Businesses may have to deal with business disruptions, lost revenue, and litigation. Thus, protecting your business from cyber liability is an essential component to any risk management program.
Having a relationship with your insurance broker and regular conversations about your business and potential legal risks will help you to select the best policy to meet your business needs. If your business is growing and you are acquiring assets that could be jeopardized by litigation, having a policy reviewed on a yearly basis may be necessary.
One of the benefits of being a member of NTCA are the business relationships that have been developed over the years. NTCA members have preferred insurance rates that can be accessed through insurance partners such as the Schechner Lifson Corporation. Marc Rosenkrantz at Schechner Lifson Corporation is the liaison for NTCA members and a great resource for any members seeking to purchase an insurance policy. He can be reached at 973-766-3914 or marcr@slcinsure.com.
It is important to protect your livelihood and personal assets. Researching the different kinds of insurance policies is crucial to ensure a firewall in case of any litigation whether you are at fault or not. Educating yourself about your potential liability risks and insurance options is good business practice.