Target Market Series: Contractors

Kim Smith

• Éditeur: The National Underwriter Company
• Année: 2013
• ISBN:
  9781938130496
• Sujet: Business
• Sous-sujet: Assicurazioni

Market-specific insurance and risk control information on Contractors. This is part of the Target Market Series. Includes print and online components. Packaged as a book with accompanying online checklists and 75 page safety guide. This combined print-online format provides easy-to-use material that can easily be taken into the field. Includes information such as: * Industry background* Market profile and key industry groups* Underwriting concerns* Coverage considerations* Industry classification codes* Applicable endorsements* Glossary of common industry terms* Risk control considerations* Coverage checklists* Common policy provisions

Chapter 1: Building Trade Contractors

INDUSTRY BACKGROUND

Building trade contractors can be defined as companies that build, fabricate, install or perform related services for others under a contract. In the United States, the construction industry may vie with the food industry as the largest business sector.

Although there are a number of ways of dividing the construction industry, there are three generally recognized classifications:

• General Contractors – who act as primary builders of new construction projects. Their activities can be broken down into three basic methods of operation: (1) building for an owner according to existing plans, (2) contracting with an owner to provide design as well as construction work and (3) acting as a package builder in which the owner is provided with complete turnkey services (i.e., the purchase of land, financing, design, and construction).

You will find that most general contractors will do at least a portion of a job themselves (usually concrete, masonry, or carpentry), although many act as brokers and utilize subcontractors to complete all phases of a project. This second type, often referred to as “paper” contractors, tend to maintain very small staffs to keep their overhead low. Other firms may engage in general construction activities but are not usually considered true general contactors. This includes developers who build for themselves; and project management companies, that supervise projects without assuming responsibility for their completion.

• Heavy Construction Contractors – who limit themselves to specialized construction activities that fall outside the scope of traditional building construction. Some common examples of such contractors might include road building or paving contractors, demolition contractors, utility contractors (gas/water mains, power lines), dam and bridge builders, logging contactors, oil and gas contractors, and asbestos abatement or other environmentally-related operation. Since many of these companies provide highly specialized work, it is not uncommon for them to act as both general contractor and subcontractor, depending on the job.
• Building Trade or Artisan Contractors – who provide a specialized type of new construction work (usually as a subcontractor); or who engage in remodeling, repair or installation services directly with an owner for a specific job involving their specialty trade. Most are locally owned with many being second or third generation family run companies. Of these, over 95% are small to medium size establishments employing fewer than 100 employees. Consequently, this category is the largest type of contracting company operating in the United States today and is the subject of this manual.

Chapter 2: Building Trade Sic Classifications

The Standard Industrial Classification manual (SIC) classifies most building trade contractors under major Group 17 – Construction – Special Trade Contractors. Most insurance carriers follow this listing as a basis for eligibility for their respective contractor’s package programs. The following is a brief description of those business types that fall under this heading.

Please note that many carriers consider one or more of the above SIC classifications as “high risk” exposures and will not write such contractors under their artisan contractor programs. Common exceptions include roofing, demolition, welding, scaffolding, excavation and water well contractors. Conversely, some contractors may routinely be considered as an artisan contractor by many carriers yet may fall under another SIC listing, such as landscapers (SIC classification 0782).

SUGGESTED TRADE CONTRACTORS CLASSIFICATION CODES

The following is a summation of the various class codes commonly used for building trade contractors. Often, specific accounts may “mix and match” these classifications depending on the activities they are involved in.

Chapter 3: Market Profile

There are more than 3,000,000 companies in business today that can be classified as construction contractors. The average premium for these accounts is approximately $9,497 per year, making them prime candidates for most agencies’ target marketing efforts. Below is a work up for the NAICS list...