Seattle Sun Newspaper - Vol. 7, Issue 6, June 2003

Copyright 2003 Seattle Sun. Please feel free to use the article and photos below in your research. Be sure to quote the Seattle Sun as your source.

AROUND THE HOME:

Check contractors' insurance

By Matt Maury

During the past few months you may have seen or heard the ads about the doctors leaving their practices because of the high cost of liability insurance. The ads have been placed by physicians to create an awareness of bills before the state Legislature placing limits on punitive damage awards against the medical professionals. The goal, of course, is to bring insurance premiums back to manageable levels for doctors.

What most people are unaware of is that the same type of insurance crisis is facing our state's contractors in the home construction, repair and remodel industry. For many years they have taken their insurance coverage for granted, paying the renewal invoices when due and submitting verification of coverage to the Department of Labor & Industries for their contractor license renewals.

Suddenly, this year, instead of a premium renewal invoice, many contractors are receiving a notice of non-renewal. Or, if the invoice does come, it is for substantially more than last year. This is especially true for window installers, roofers and general contractors.

Why now? Two unrelated events have caused this situation. The first is that insurance companies' incomes are down. Revenues come from two sources: the paid-in policy premiums and the income generated by placing the premiums in sound investments property, stocks, bonds, etc. The recent low interest rates have caused companies to earn substantially less on these investments than they have historically.

At the same time that income has been reduced, a second event has caused claim payments to go up. There have been huge court settlements for water and mold problems in homes, as well as potential settlements for specific products used in residential construction.

So, it has gotten to a point where, just as all 18-year-old boys are considered high-risk for auto insurance, all general contractors and many specialty contractors are now considered to be in a high-risk category, no matter what their past claims record has been.

Some companies have just stopped insuring contractors. Others have limited their coverage to only those working on individual single-family homes no tract homes and no condominiums. This is to eliminate the potential for multiple claims that might come from similar work. As the number of firms offering insurance for each type of contractor is reduced, the remaining firms charge higher premiums for the greater risks being taken.

How have these events impacted local contractors? Some are quitting business, some are operating without insurance and some are paying the higher premiums while adjusting their pricing accordingly. Knowledgeable consumers should be prepared to pay higher prices as well as always checking to be sure a contractor is properly insured, bonded and licensed. Because of the number of contractors whose insurance has been canceled recently, it is wise to recheck on firms that have been used in the past. The Department of Labor & Industries Web site (www.lni.wa.gov/contractors/contractor.asp) shows a contractor's current status.

Home genealogy workshop:

From time to time, requests come for information about ways to find the history of a home as detailed in my August 2000 column (see www.theseattlesun.com/news.html). For those interested in a workshop giving the tools to do architectural genealogy on a home and how it might qualify for Seattle's "landmark" designation, Historic Seattle will be presenting one on June 7 in the Wallingford neighborhood.

Information is available by calling 622-6952 or on the organization's Web site, www.historicseattle.org.