The history of Lloyd’s begins at Edward Lloyd's coffeehouse in 1688, where he attracted a clientele of merchants, particularly ship owners with vessels and cargoes needing protection. Mr. Lloyd’s establishment quickly evolved into a meeting place where businessmen sought brokers to place insurance with wealthy, reputable men. Character and integrity were important because the persons (called underwriters) who agreed to invest in the ships and cargoes put their personal fortunes at risk in order to pay their share of any claim. If a ship’s voyage was successful, the underwriter would share in the profits.
Note: The term underwriter came from the practice of persons agreeing to insure a ship and/or its cargo by placing his signature under the name of the vessel he was willing to sponsor.
Lloyd's of London has long been identified with British history and the growth of worldwide commerce. It is an international insurance market, located in London, whose members cooperate with each other, compete with each other and, of course, compete against other insurance organizations. There are four major markets at Lloyd's: Marine, Non-Marine, Aviation and Motor. Lloyd’s also has a smaller market that handles short and long term life insurance. Lloyd's is an important player in the contractors insurance and general liability market.
Insurance is not placed with the Corporation of Lloyd's, a society incorporated under Act of Parliament of 1871. The Corporation provides the premises, shipping information services, administrative staff and other facilities that enable the Lloyd's market to transact insurance business. The actual insurance transactions are handled by thousands of Lloyd's members. About one-third of the membership is actively engaged in the market. The remaining members provide capital, but do not actively place business in any of Lloyd’s insurance markets. Only the underwriting members may accept insurance business on behalf of a syndicate.
Historically, a policyholder with a valid claim could be certain that the claim would be paid, whatever the cost to the member who accepted the risk. Formerly, every underwriting member was responsible up to the full extent of his personal assets for his share business. If his personal assets were not enough, Lloyd's would make any deficit out of its reserve funds.
Today, Lloyd's liability is more conventional, limited in the same manner as traditional insurance companies. The change was necessary due to its long-term problem in handling losses associated with asbestos claims. Lloyd’s created a separate entity to handle that large source of loss and many organization members became inactive (no longer writing new business) in order to meet their payment obligations.
While Lloyds’ number of active memberships has substantially decreased; they are made up of, primarily, corporate entities. Lloyd’s capacity to write business in the global marketplace is substantial and growing. Lloyd’s will continue to be an important part of the insurance market, especially the contractors insurance and general liability market.
General contractors (GCs) are the playmakers for any significant construction project, taking responsibility for all key operations such as construction assignments, job site supervision, and activity coordination. Typically, GCs have their own construction specialty (example: malls, restaurants, office buildings, stadiums, arenas, parks, etc.). GCs are often larger concerns with a tremendous amount of expertise in their area of specialty. The level of experience is critical since it permits a construction project to be led efficiently and more successfully.
GCs may assign/award work in a variety of ways, such as:
· supplying all of the specialty contractors for an entire project, such as the
excavator, electrician, heating contractor, cement contractor, plasterer, and so
· using their own, permanent employees for certain jobs, and
· subcontracting the remaining tasks to other, smaller construction specialists
After land has been purchased and the design/architectural work has been done, the general contractor proceeds, usually beginning with site preparation, through excavation, foundation-laying, framing, and finishing until the building or project is completed. The general contractor provides the materials and equipment according to the applicable design specifications (usually provided by the architect). The GC must comply with all local and state ordinances, codes and zoning requirements. This includes purchasing the necessary permits and obtaining the necessary surety bonds. General Contractor Insurance also must be in order, specifically General Liability Insurance.
GCs may either be hands-on operators, who actively take part in construction, or they may be "paper" operators, overseeing the actual work of other contractors. The general contractor may rent, lease or borrow equipment (including equipment operators) for use by subcontractors. Since the general contractor is responsible for the job site, he/she should be aware of the proper use of the equipment during construction. Is the equipment being used as it was designed to be used? Is the equipment's load capacity routinely exceeded? Finally, GCs have many contractual and administrative obligations such as making sure that critical project deadlines are met, that payroll is handled, materials and equipment are obtained and that the project's budget is followed (avoiding cost overruns), proper insurance is maintained by all subcontractors especially, contractors insurance and contractors general liability.
A business that harms another party or damages/destroys property that belongs to another party may be sued or prosecuted. Larger businesses protect against their liability to third parties with a Commercial General Liability (CGL) policy. The CGL is designed to cover a given business that is described within the policy. An insurance company provides a CGL under some assumptions about the type of losses it is willing to cover. One issue that can undermine a CGL is contractual liability. Contractual liability throws the CGL for a loop. It describes a covered business that voluntarily agrees (in writing) to take over someone else's responsibility.
A CGL's design and cost is based on the assumption that it only has to concern itself with the party that is listed on the policy. Taking on some other business' liability means that the policy is being asked to either defend or pay for the injuries or damages caused by an entity that it doesn't "know". Further it is being asked to do so without any additional premium. Therefore, CGLs exclude most instances of contractual liability.
A company that decides to step-in for another company has to make careful arrangements to handle a loss it has assumed. It may try to take care of the situation by endorsing (changing) its CGL by adding the name of the other party as an additional insured. Or, when the insured company is a property owner and the other party is a contractor, the property owner may buy a special form of coverage called Owners and Contractors Protective Liability.
Regardless the coverage arrangement, not every situation will be covered. You need to read the CGL or Owners and Contractors Policy language to determine what situations are insured. A loss has to be a type that is eligible under the CGL or OCP. Further, the contractual arrangement has to be related to the type of operation insured by such policies.
Example: You own a printing company and you, in writing, agree to cover your friend's plumbing business if they are sued by one of your customers. Neither a CGL nor an OCP would help, because the written agreement has no relationship to your operations.
A smart move is to discuss your business relationships with an insurance professional. It’s a solid way to be sure that your business liability is handled efficiently and economically. This often means that the best strategy is to have every party take care of their own insurance needs. ABCContractorInsurance.com is your source for contractor insurance.
Artisan Contractors are smaller operations that work in a variety of settings. They may be involved on large construction projects under the direction of general contractors, operate in smaller residential projects, specialize in installations or work on renovation or remodeling projects.
Artisan contractors are involved in many types of specialties such as plumbing, electrical work, minor excavation, landscaping, heating, air conditioning, painting, roofing, dry-walling, carpentry, remediation services, asphalt/paving, etc. These operations need a full complement of insurance services, such as general liability, inland marine (to protect their tools/equipment), workers compensation, commercial auto, excess liability and commercial property.
There is no standard definition of an artisan contractor. They are typically defined according to an individual insurance company's underwriting rules. The factors typically considered are:
Artisan contractors need knowledgeable insurance professionals to help them identify their protection needs, especially in the areas of handling exposures to the contractor's tools and equipment. Complete information must also be developed concerning losses that may occur on their customer's premises and damage a contractor may cause to property that belong to third parties, but which is in the contractor's possession or control.
Rod Hanks has owned and operated The Hanks Group for 14 years, a diversified insurance agency that focuses on the unique insurance needs of contractors. Although our main focus is contractors insurance, we do offer health, life, and personal lines insurance. Rod can be reached at 214-275-8372 or firstname.lastname@example.org