Determining the appropriate risk level in certain professions can be challenging, and yet it is a critical aspect to ensuring your client has the correct coverage. One profession that causes a lot of confusion because of significant overlap in job descriptions is in the area of home repair. Do you know how to quickly determine if you’re insuring a general contractor, a remodeler or a handyperson?
Here are 5 questions to ask to discover the correct risk category:
- Are they licensed? One quick way to ascertain the correct category is to find out if they are licensed in a particular trade, such as an electrician or a plumber. If so, this person may be a remodeler or a general contractor, while a handyperson generally does not have any specific trade license.
- Another question you can ask to put your client into the correct risk pool is what type of project do they typically work on, and how much are their sales.
- A handyperson typically is involved in small residential projects, with a gross sale of less than $1500.00. Rarely will a handyperson be involved in commercial work.
- A remodeler generally will take on either residential or commercial repair/remodeling projects with gross sales of more than $1500 per project.
- Are the involved in the entire process? General contractors are involved with either residential or commercial projects and can include new construction or repair/remodeling. They will be involved in ground-up construction. Gross sales tend to be much larger.
- Do they hire subcontractors? Next, you’ll want to determine if your client has employees or uses subcontractors. A handyperson is going to be a small business with at most two employees in addition to the owner(s). In comparison, a remodeler will most likely have more than two employees, plus the owner(s). Occasionally you will find remodelers who subcontract out a majority of their work, but typically they will be doing a lot of the work themselves. General contractors, on the other hand, frequently subcontract out 100% of their operations. You can expect a general contractor to have clerical employees in addition to the owner(s), and the remainder of their workforce will be subcontractors.
- Do they handle new construction? Your handyman is not going to be doing new construction work. A remodeler might be involved in new construction if they are hired for an addition to an existing building. A general contractor is frequently working on new construction.
- How do they handle roofing jobs? A handyman will only be involved with some patching repairs that may occur in tandem with non-roofing work on a particular project. A remodeler will provide roofing services as part of a remodel or repair project. This will require separate classification. General contractors provide roofing services that are part of a subcontracted operation, or is separately classified.
While this article doesn’t cover every scenario and certainly is not a replacement for underwriting guidelines, these five questions will give you a quick overview to determine where a risk will fit the best.