Inquiring About Insurance

Q: I am in the process of setting up my own business to do health and safety housing evaluations and am having trouble getting insurance through my local company. I recently received a sample of Home Energy's Home Performance Brochure and said to myself, "Wow--That's me!" Do you know of any trade organizations through which I could obtain insurance to do this kind of home performance work?

Charles Woodhams, Executive Director
Vermont Housing Safety Institute
Barre, Vermont

Contracting expert Greg Thomas:

A: You should look for an independent insurance agent who represents a wide variety of companies. Since you won't fit neatly into any one slot, the independent agent will be able to sort through options to find the best fit. The first question is whether you are going to do any installation work. If not, an office policy (a policy for someone who works in an office) with general commercial liability may be all that you need to perform inspections and diagnostics. If you are going to do installations, you might be able to get by on a carpenter's policy, if you are not doing HVAC or too much insulation. Prices I have seen range from roughly $500 per year for an office policy with no installation work to $800 per year with an additional starter HVAC policy. These rates will scale up as you do more work. If you have employees, don't forget to obtain workers' compensation insurance. The standard liability coverage per event is $1 million. Many entities, such as states and utilities, require this much coverage to do business with you. It is typically included in the prices quoted above.

Part of your protection from liability can be found in how you present your reports. Reports should contain a standard clause that limits your liability based on the subsequent actions taken by the customer, particularly those taken without your advice. Consult a lawyer on the proper wording of such a clause. This clause should be written in a way that encourages the customer to work with you.

Some trade groups, such as the Air Conditioning Contractors of America (ACCA) and the National Association of the Remodeling Institute (NARI), offer special insurance rates to their members, as well as many other benefits.

--Greg Thomas

Greg Thomas is president of Performance Systems Development Incorporated in Ithaca, New York.

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