As a contractor, one of the most frequently misunderstood terms you’ll encounter when getting insurance quotes is “primary and noncontributory.” Whether you’re a general contractor, subcontractor, or skilled tradesperson, understanding this endorsement is crucial for protecting your business and meeting client requirements.
The “primary” designation means your insurance policy will be the first to respond to a claim before any other applicable policies. Think of it as being first in line at a job site – your insurance takes the lead in handling any issues that arise. For contractors, this typically means your insurance policy must pay before your client’s policy becomes involved.
The “noncontributory” part means your insurance company stands alone in handling the claim. They cannot ask other insurance policies to chip in and help pay. This is particularly important when working on large projects where multiple contractors might be involved.
How Primary and Noncontributory Endorsements Work
Let’s say you’re a plumbing contractor working on a commercial building project. You’ve gotten several insurance quotes and chosen a policy that includes primary and noncontributory endorsements. Here’s how that plays out:
During installation, one of your employees accidentally causes significant water damage to the building. The property owner gets sued by several affected tenants for property damage and business interruption. Because you have primary and noncontributory endorsements, your insurance company steps in immediately to handle the claim. They can’t ask the building owner’s insurance to share the cost, which means the building owner’s insurance remains untouched and your relationship with the client remains protected.
Primary and Noncontributory on Liability Policies
Commercial General Liability (CGL) provides protection for third-party bodily injury and property damage claims, and this is typically the most important policy to have this endorsement. Property owners and general contractors aren’t just creating extra paperwork when they require this endorsements – they’re protecting their interests and establishing clear responsibility for potential claims. If your customer or project manager is requesting this coverage, you’ll want to check before send over your certificates of insurance (COIs). If you don’t have it, your carrier can likely add it for additional premium. Alternatively, if you know that many of your projects require this coverage, you can get it when you’re securing quotes and comparing your options.
Primary and Noncontributory vs Waiver of Subrogation
Primary and noncontributory endorsements determine which policy pays first and prevents sharing the cost among multiple policies, while a waiver of subrogation prevents your insurance company from trying to recover payments from other parties after paying a claim.
Protecting Your Business: Best Practices
To make the most of your contractor insurance coverage, it’s essential to begin by reviewing all contract insurance requirements carefully before accepting any work. This careful review should be complemented by a close working relationship with your insurance broker, who can ensure your coverage aligns with project needs. Additionally, maintaining detailed records of all endorsements alongside your certificates of insurance provides crucial documentation for when you need it most. Regular reviews of your coverage limits help ensure you’re adequately protected as your business grows and project requirements evolve. For larger projects or more demanding clients, you may want to consider higher limits to better protect your business interests.
Cost Considerations
When comparing contractor insurance quotes, you’ll find that this endorsements may increase your premium. However, they’re typically worth the investment because they ensure contract compliance and your ability to work on desired projects. This endorsement protect your business from complex claims situations and may be required for accessing larger, more profitable projects. Perhaps most importantly, they help maintain positive relationships with clients and general contractors, which is invaluable for your business’s long-term success.
Get Quotes Today
Ready to protect your contracting business with the right insurance coverage? ContractorNerd specializes in helping contractors like you find the perfect insurance solution. Our expert team understands the unique challenges you face and can help you secure competitive quotes that include all necessary endorsements.
Remember, having the right insurance coverage isn’t just about meeting requirements – it’s about protecting your business’s future. Let us help you find the perfect coverage at the right price.