Liability insurance

[kwired]

I had to bump my policy from 1 mil to 3 mil to accommodate potential losses on a couple of McMansions I've had to do some work on. The difference in cost between those levels was very minimal, also upped tool coverage level. Inflation also has taken smaller homes replacement levels much higher pushing policy coverage level needs higher too.

My question is if you are working on a 3 million dollar mansion do you need 3 million dollars of coverage? How likely is anything that happens as a result of your work going to cause complete destruction of everything? Most incidents that may do that would likely have fire involved, if codes were followed shouldn't there be code required fire barriers in some points, maybe even sprinklers or other items that should reduce the chance of total destruction? If not could you file counter suit (or something similar in principle) that will at least lessen your liability in the case?

That said I do agree that the way things have gone it possibly is time to re-evaluate how much coverage one maybe should have.

 

[DBoone]

IIRC, there generally isn't much difference in premium cost for 2M vs 1M and many go with 2M because of that.

Exact reason I went with 2M for my policy this year

 

[petersonra]

If not could you file counter suit (or something similar in principle) that will at least lessen your liability in the case?

The way it works is that the insurance company takes over the management of the case. They decide what is most appropriate and given they have vast experience in the liability field, and the average electrician has none, what they decide is probably best for everyone.

 

[kwired]

The way it works is that the insurance company takes over the management of the case. They decide what is most appropriate and given they have vast experience in the liability field, and the average electrician has none, what they decide is probably best for everyone.

I get that, but does an electrician tell a 3 million dollar homeowner that he can't add that one new circuit because he only has a 2 million dollar liability policy? If he adds that one circuit how likely is it to cause damages to all 3 million dollars of the home if it did start a fire or something?

If anything what you are getting at is what the insurance company might recommend for coverage limits for the contractor as a general rule based on what kind of projects they take on.

Next way around this to some extent is to operate as an LLC or corporation and if you are sued for more than the 2 million they only take your company assets at the most. Gross negligence is about the only way they can tap into personal assets on top of company assets. May put you into a hardship but you can possibly open a new business under a new LLC or corp.