Professional and product liability for renovation contractors performing small jobs
Dec 21, 2020
By: Tzachi Tahar Lev
According to data recently published by the Renovation Contractors Association, there are approximately 17,000 "small-job" contractors operating in Israel. It is also reported that the industry generates approximately 15 billion shekels annually, and that renovations are carried out in more than
Professional and product liability for renovation contractors performing small jobs
Not this one either. In recent years, there has been a dramatic change in the human capital involved in small contracting and renovations. These are no longer "diggers" or "suckers" of sorts, but rather
In this setting, it is interesting to know that many contractors
Often, the work orderers (renovation clients) do not require "proof of insurance" at the beginning of the work, and do not make it a condition for starting work, out of a lack of awareness of the risks and liability that can lie even on their doorstep. Therefore, renovation contractors and small work contractors
By: Tzachi Tahar Lev
According to data recently published by the Renovation Contractors Association, there are approximately 17,000 "small-job" contractors operating in Israel. It is also reported that the industry generates approximately 15 billion shekels annually, and that renovations are carried out in more than 300,000 households .
Professional and product liability for renovation contractors performing small jobs
Not this one either. In recent years, there has been a dramatic change in the human capital involved in small contracting and renovations. These are no longer "diggers" or "suckers" of sorts, but rather respectable businesses operated by top-notch professionals . Among them are quite a few engineers, architects, and contractors with extensive experience and a large clientele.
In this setting, it is interesting to know that many contractors have not yet learned to protect themselves with appropriate insurance for contractor work, professional liability insurance, and product liability. A significant portion of those engaged in the field have not purchased such insurance at all, and others have purchased policies, but they do not provide an appropriate professional response to every scenario .
Often, the work orderers (renovation clients) do not require "proof of insurance" at the beginning of the work, and do not make it a condition for starting work, out of a lack of awareness of the risks and liability that can lie even on their doorstep. Therefore, renovation contractors and small work contractors must take the issue of insurance very seriously . Note that even if the work orderer purchases insurance privately ("apartment renovation insurance"), the insurance often does not cover the contractor but only the orderer (due to the lack of appropriate definitions and extensions). If you are a contractor for renovation and construction work - the following text is a must-read for you.
Risk and Tort Law
First of all – the risk. When performing renovations and "small jobs," the contractor is exposed to various insurance risks that can occur years after the work is completed.
Consider, for example, the recent unfortunate incident in Mitzpe Ramon, where a young woman in her 20s fell to her death from a height of 10 stories after leaning on a poorly installed railing. This type of case could result in a tort claim against the person who installed the railing, a claim that could "jump" to huge sums.
Israeli tort law states that the injured party is entitled to compensation according to the principle of " restoration of the situation to its former state ." That is, compensation must be awarded in his favor that will place him in the position he would have been in had the wrong not occurred.
The lost years rule, formulated in a series of rulings starting in 2007, established full compensation for the injured party (or their survivors) for the lost years of potential earnings. In the case of death or serious physical injury, the compensation often amounts to large sums for the loss of future earnings.
For example, if an injured person has lost his ability to earn a living, the compensation should reflect his "lost" salary up to retirement age. This is in addition to other heads of damage such as third-party assistance, medical expenses, mobility expenses, etc. These are claims that frequently climb to huge sums totaling millions of shekels.
First of all – the risk. When performing renovations and "small jobs," the contractor is exposed to various insurance risks that can occur years after the work is completed.
Consider, for example, the recent unfortunate incident in Mitzpe Ramon, where a young woman in her 20s fell to her death from a height of 10 stories after leaning on a poorly installed railing. This type of case could result in a tort claim against the person who installed the railing, a claim that could "jump" to huge sums.
Israeli tort law states that the injured party is entitled to compensation according to the principle
The lost years rule, formulated in a series of rulings starting in 2007, established
For example, if an injured person has lost his ability to earn a living, the compensation should reflect his "lost" salary up to retirement age. This is in addition to other heads of damage such as third-party assistance, medical expenses, mobility expenses, etc. These are claims that frequently climb to huge sums totaling millions of shekels.
At the Itzick Simon Insurance Agency, which has been working for over 30 years with contractors and entrepreneurs carrying out large construction projects, we offer renovation contractors or small work contractors the highest quality policies - a contractor's policy and a combined policy for product liability and professional liability insurance .
It is important to note that the professional liability and product liability tier is an insurance solution that is based on the "date of claim." That is, in order for coverage to exist, the insurance must be valid both at the time the work is performed and at the time the damage occurs.
If we return to the bars in Mitzpe Ramon, then a professional liability or product liability policy will only be effective if the contractor who performed the work was insured both at the time of installation and at the time of the young woman's fall from the great height . The policy that will cover the event is the policy in effect at the time the claim is filed.
At our insurance agency, we strive to ensure that not only appropriate insurance amounts are provided for all sections of the policy, but we also know how to include the necessary extensions and additions, including reference to relevant exclusions determined according to the scope and type of activity of the insured.
The integrated insurance solution
Retroactive coverage and legal expenses coverage
When drafting professional liability and product liability policies, it is important to verify the existence of retroactive coverage , or in professional jargon: a retroactive date, specified in the policy. This is to ensure coverage for projects that were carried out from the date the insurance was first purchased onwards. Sometimes, effective retroactive coverage can be formulated while maintaining a professional dialogue with the insurance company.
Another important coverage worth mentioning is legal expenses coverage . Often, even renovation contractors or small work contractors who have acted perfectly may find themselves sued by victims claiming various damages.
In these situations, even if there was no defect in the insured's work, he may still be "dragged" into legal proceedings. A proceeding that involves extremely high expenses, and sometimes its very existence constitutes damage to reputation.
When the renovation contractor or small-job contractor reaches this point with an insurance company behind him, the insurer will bear the legal costs. The insurance company will try to fend off the claim and, in the best case scenario, even have it dismissed before it even begins. Not only is the coverage intended to provide a financial solution for any damages that will be awarded, but it sometimes also helps to dismiss frivolous claims.
When drafting professional liability and product liability policies, it is important to verify the existence of
Another important coverage worth mentioning is
In these situations, even if there was no defect in the insured's work, he may still be "dragged" into legal proceedings. A proceeding that involves extremely high expenses, and sometimes its very existence constitutes damage to reputation.
When the renovation contractor or small-job contractor reaches this point with an insurance company behind him, the insurer will bear the legal costs. The insurance company will try to fend off the claim and, in the best case scenario, even have it dismissed before it even begins. Not only is the coverage intended to provide a financial solution for any damages that will be awarded, but it sometimes also helps to dismiss frivolous claims.
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