Obtaining Commercial General Liability Insurance for a State/Federal contracting

[steppinthrax]

I'm in the process of bidding on a state contract. Within the RFP is a statement that says something along these lines.

The Contractor shall maintain Commercial General Liability Insurance with limits sufficient to cover losses resulting from, or arising out of, Contractor action or inaction in the performance of the Contract by the Contractor, its agents, servants, employees, or subcontractors, but no less than a Combined Single Limit for Bodily Injury, Property Damage, and Personal and Advertising Injury Liability of $1,000,000 per occurrence and $3,000,000 aggregate.

The problem is when calling oil insurance companies, they don't seem to have an idea why I need 3M aggregate. One other said they don't write policies for federal contracting. My fear is that I'm telling them too much about my business where they don't want to write a policy. This is a new business and I'm attempting to bid on state contracts. My fear is the state contracts don't require a heavy duty policy, while the federal does. Or maybe I'm wrong?

Based on my research it looks like it should be around 5 to 800 a year for this kind of insurance?

Thanks

[Freelancier]

Try this: call the people who write your homeowner's insurance. Companies like State Farm write general commercial liability insurance that covers basically anything that happens because of your actions on-site. Won't cover "errors and omissions" or other possible issues (e.g., cyber-security), but they're not asking for that, they're asking for general liability, so see if your commercial insurance vendor can give them what they want. I'm paying $250 for mine, but it's $1M per occurrence, $2M aggregate, I think, and I had to beef up our car insurance with them, but it's going to be dependent on the type of activity you will perform, so yes, you have to tell the insurance company that information.

The other thing is that you don't need the insurance until you win the contract. No RFP requires you to have the insurance to win the bid, just to perform the work, so just make sure you have a path to getting the insurance and don't sweat it until you know there's revenue coming from the contract.

[steppinthrax]

Try this: call the people who write your homeowner's insurance. Companies like State Farm write general commercial liability insurance that covers basically anything that happens because of your actions on-site. Won't cover "errors and omissions" or other possible issues (e.g., cyber-security), but they're not asking for that, they're asking for general liability, so see if your commercial insurance vendor can give them what they want. I'm paying $250 for mine, but it's $1M per occurrence, $2M aggregate, I think, and I had to beef up our car insurance with them, but it's going to be dependent on the type of activity you will perform, so yes, you have to tell the insurance company that information.

The other thing is that you don't need the insurance until you win the contract. No RFP requires you to have the insurance to win the bid, just to perform the work, so just make sure you have a path to getting the insurance and don't sweat it until you know there's revenue coming from the contract.

I called my personal insurance (Liberty Mutual), they sent me to Ohio Causality. Ohio doesn't do this type of policy. I was sent to another company (also under LM). They did say they do these policies, he said he would write me up a quote, however the insurance amounts are pretty high. I got a better understanding from him it seems Maryland wants higher ins for doing business with him. Example

General liability = 1M per occurance 3M aggregant (usually 1M and 2M)
Fidelity = 1M (usually NONE)
Workers comp req (usually none)


So all together the insurance is around 2K a year!!! Esp since this is going to be higher than fed contracting ins. The RFP requires insurance to be provided 5 days after award, so you need to have it...

[Fulcrum]

So all together the insurance is around 2K a year!!!

Not to sidetrack, but I'll trade you my $3500/year coverage for your $2K/year.

[steppinthrax]

Not to sidetrack, but I'll trade you my $3500/year coverage for your $2K/year.

LOL,

Based on my research you have a med size - large comp then?

[Freelancier]

The RFP requires insurance to be provided 5 days after award, so you need to have it...Right, that's what I was telling you: you do the legwork now, but don't bind the policy. Any agent can bind a policy if all the paperwork is in order inside of a day once everyone agrees to the coverage and price. If you don't get the contract, you don't need to bind the policy.

[steppinthrax]

Right, that's what I was telling you: you do the legwork now, but don't bind the policy. Any agent can bind a policy if all the paperwork is in order inside of a day once everyone agrees to the coverage and price. If you don't get the contract, you don't need to bind the policy.

Yeah, this is what I figured. I'm getting a little sticker shock.

The guy from Hartford contacted me, it's cheap one direction but expensive according to the State's direction.

The Basic General Liability for IT is about 425 a year (lol)

Now I have to get Worker's Comp at another 525 (I have no employees)

Then I have to get Fidelity for 1M at 1,400 a year!!!!!!!!

So all together we are talking 2400 abouts!!!!

Even the ins guy on the phone was saying this is some **** because when he writes policy it's usually basic general liability. No workers comp and def no fidelity.

[Freelancier]

So you mark up the price of the bid accordingly. If the contract was too small to support that and the profit you need, then it's not a good contract to bid for your first time out.

[MyITGuy]

Check out Liability Insurance for small businesses | Hiscox (http://www.hiscox.com/) - I had no issues getting insurance with them. 1mil/3mil is a pretty standard amount requested in business contracts...its when they request higher that you can usually try to push back.

[steppinthrax]

Check out Liability Insurance for small businesses | Hiscox (http://www.hiscox.com/) - I had no issues getting insurance with them. 1mil/3mil is a pretty standard amount requested in business contracts...its when they request higher that you can usually try to push back.

Thanks,

What type of "push back" are you referring to? Two things make no damn sense here. (1) This is a supply contract, you are purchasing **** for the gov to use. (2) Why Workers Comp ins, you are not going to be onsite (3) Why Fidelity, the total cost of the items are less than 1M?

So then I was told that I can write this into the proposal (lack of Workers Com or at least lack of Fidelity). But them my suspicions is they will throw it away based on this.

[Brian Altenhofel]

Are you in IT or oil? I recall you mentioning IT in a previous thread and again in a comment on this thread, but your OP here mentioned oil.

If in IT, I highly recommend General Liability and Professional Liability Insurance for IT Businesses | Tech Insurance (http://www.techinsurance.com/default15.aspx)

I used them and they came highly recommended by other tech companies. They are a broker that gets quotes from several companies for you for each of the different policies you need.

By the way, READ YOUR POLICIES! If a policy looks significantly cheaper, it's likely an included peril policy. If it's significantly more expensive, it likely contains fewer exclusions. If you're self-employed and in a position where you may experience a job-related injury that your personal insurance won't cover, make sure your workers' compensation policy includes an endorsement for owners (owners, partners, and C-level or equivalent are typically excluded). If you deal with software or application development, consider intellectual property coverage (especially if using open source software), though that will require that your company has proper controls in place.

[Brian Altenhofel]

Why Workers Comp ins, you are not going to be onsite

Some states have blanket regulations on contracts. In many states, self-employed contractors aren't required to carry Workers' Comp when doing business with the general public, but the regulations on state contracting doesn't provide any exceptions for the self-employed if doing business with the state.

Also check your state's pricing regulations. Some won't allow line items for travel, so those expenses may need to be rolled into the other line items across the bid.

[Fulcrum]

LOL,

Based on my research you have a med size - large comp then?

Nope. Small business (could even consider it as micro), myself + one employee. Coverage includes new replacement value of equipment/tools, lost income, 2M liability, customer product in shop, inventory, and whatever else gets tacked on.

There are 3 primary drivers as to why the price is higher:
1) Most of the insurance companies/brokers don't understand what I do regardless of what I say
2) I have a wood stove to heat the shop
3) Accidents that might happen when I'm on the customer's property (heavy equipment and heavy rotating mass)

[MyITGuy]

Thanks,
What type of "push back" are you referring to?
Just recently signed a client who wanted a 10mil aggregate that would've cost us a pretty penny that we were able to push back on based on industry standards along with our negotiated fee (If they insisted on the 10mil aggregate then their fee would double/triple)


Two things make no damn sense here. (1) This is a supply contract, you are purchasing **** for the gov to use.
Makes perfect sense IMO.
1st - Assuming you are doing deliveries (OIL?) or services (IT?) then this policy will cover any potential damages you cause or are at fault at while performing the delivery/service at their location
2nd - Assuming you are providing a product (OIL?) or services (IT?) then this policy will cover any potential damages caused by your product or service due to faulty products/services that cause damage to themselves, other equipment or facilities.

Assuming this is for OIL, a quick example would be you delivering a truckload of product, hitting/damaging the storage device that causes the product to spill/leak and/or combust which damages the surrounding property/equipment.
Assuming this is for IT, a quick example would be you installing a network component that fails (faulty product and/or installation), catches fire and destroys surrounding equipment, sets off sprinkler system and floods the office.

These costs can quickly approach/exceed 1mil IMO...so having an appropriate amount of insurance will save you and your company in this instance.

[steppinthrax]

Just recently signed a client who wanted a 10mil aggregate that would've cost us a pretty penny that we were able to push back on based on industry standards along with our negotiated fee (If they insisted on the 10mil aggregate then their fee would double/triple)


Makes perfect sense IMO.
1st - Assuming you are doing deliveries (OIL?) or services (IT?) then this policy will cover any potential damages you cause or are at fault at while performing the delivery/service at their location
2nd - Assuming you are providing a product (OIL?) or services (IT?) then this policy will cover any potential damages caused by your product or service due to faulty products/services that cause damage to themselves, other equipment or facilities.

Assuming this is for OIL, a quick example would be you delivering a truckload of product, hitting/damaging the storage device that causes the product to spill/leak and/or combust which damages the surrounding property/equipment.
Assuming this is for IT, a quick example would be you installing a network component that fails (faulty product and/or installation), catches fire and destroys surrounding equipment, sets off sprinkler system and floods the office.

These costs can quickly approach/exceed 1mil IMO...so having an appropriate amount of insurance will save you and your company in this instance.

Sorry, meant IT, not OIL,

However, no person will really be on site. Items will be shipped.

Thanks