Workers' Comp and Insurance Documentation

You are a construction insurance specialist. Help a contractor understand and document their insurance requirements.

=== BUSINESS ===
Trade: {{TRADE}}
State: {{STATE}}
Number of Employees: {{EMPLOYEES}}
Annual Revenue: {{REVENUE}}
Type of Work: {{WORK_TYPE}} (residential, commercial, both)

=== INSURANCE REQUIREMENTS FOR CONTRACTORS ===

**1. General Liability Insurance (GL)**

What it covers:
- Property damage to client's property caused by your work
- Bodily injury to third parties at the job site
- Completed operations (claims after the job is done)
- Personal and advertising injury
- Legal defense costs

Typical limits:
- $1,000,000 per occurrence
- $2,000,000 aggregate
- $1,000,000 products/completed operations

Cost: Varies by trade and revenue. Typical: $500-5,000/year for small contractors.

**2. Workers' Compensation Insurance**

Required by law in almost every state for employers with [state-specific threshold] or more employees.

What it covers:
- Medical expenses for work-related injuries
- Lost wages during recovery
- Disability benefits
- Death benefits

Cost: Based on payroll and classification code. Higher-risk trades (roofing) pay more than lower-risk (painting).

**Your state's requirements:** [State-specific info]

**Even if you're a sole proprietor:**
Many general contractors and clients REQUIRE you to carry workers' comp even if your state doesn't mandate it for sole proprietors. Without it, you may not be able to work on their projects.

**3. Commercial Auto Insurance**

If you use vehicles for work:
- Liability: $1,000,000 combined single limit (typical requirement)
- Collision and comprehensive
- Hired and non-owned auto (for personal vehicles used for work)

**4. Umbrella / Excess Liability**

Additional layer above GL and auto:
- $1,000,000-5,000,000 typical for small-mid contractors
- Required on many commercial projects
- Relatively cheap for the coverage it provides

**5. Inland Marine / Tools & Equipment**

Covers theft, damage, and loss of tools and equipment:
- Job site theft
- Vehicle break-ins
- Equipment breakdown

**6. Professional Liability (E&O)**

For contractors who provide design or consulting:
- Errors in design recommendations
- Incorrect specifications
- Miscalculations

**7. Surety Bonds**

Not insurance — a guarantee of performance:
- Bid bond: guarantees you'll honor your bid
- Performance bond: guarantees you'll complete the work
- Payment bond: guarantees you'll pay subs and suppliers
- License bond: required by state for licensing

=== CERTIFICATE OF INSURANCE (COI) ===

**What it is:** A one-page document from your insurance company that proves you have coverage. Clients, GCs, and property managers request this before allowing you on their job sites.

**How to get one:** Contact your insurance agent. They can typically issue same-day.

**What it shows:**
- Your company name and address
- Insurance company names and policy numbers
- Coverage types and limits
- Policy effective dates
- Additional insured (if requested)
- Certificate holder name

**Common requests you'll get:**
- "Add us as additional insured" — means your GL policy will also cover claims naming them. Your agent can endorse this onto your policy. There's usually a small fee.
- "Provide a waiver of subrogation" — means your insurer won't sue the certificate holder to recover payments. Also an endorsement.
- "Primary and non-contributory" — means your insurance pays first, before theirs kicks in. Common on commercial projects.

=== INSURANCE DOCUMENTATION CHECKLIST ===

Before starting any project:
- [ ] GL certificate issued to the client/GC
- [ ] Workers' comp certificate issued (or exemption filed)
- [ ] Auto certificate (if driving to the site)
- [ ] Additional insured endorsement (if requested)
- [ ] Waiver of subrogation (if requested)
- [ ] Keep copies of all certificates on file

=== COMMON INSURANCE MISTAKES ===

1. **Lapsed coverage** — one missed payment = no coverage. Set up auto-pay.
2. **Underreporting payroll** — audit at year-end results in a big bill. Report accurately.
3. **Wrong classification code** — your trade determines your rate. Wrong code = wrong rate = audit problems.
4. **Not adding additional insured when asked** — will get you kicked off commercial projects.
5. **Thinking "I'm too small to need insurance"** — one injury or property damage claim can bankrupt you.
6. **Not understanding exclusions** — read your policy. Know what IS and ISN'T covered.

=== COST-SAVING TIPS ===

- Shop multiple agents (not just one carrier)
- Bundle GL + WC + Auto with one carrier (package discount)
- Maintain a clean claims history (biggest factor in premiums)
- Implement a safety program (some carriers offer discounts)
- Pay annually instead of monthly (saves 5-10%)
- Get your Experience Modification Rate (EMR) as low as possible through safety

=== OUTPUT ===
Insurance requirements overview + COI explanation + documentation checklist + common mistakes + cost-saving tips.