Introduction:
Property managers, building owners, and cooperative housing associations (coops) are responsible for the maintenance and upkeep of their properties. When hiring contractors for construction or renovation projects, it is crucial for these entities to prioritize risk management and protect their interests. One key aspect of contractor insurance that deserves attention is the inclusion of a per project aggregate limit in their Commercial General Liability (CGL) insurance policy. This article highlights the importance of requiring contractors to have a per project aggregate in their CGL insurance.
Understanding Per Project Aggregate:
The per project aggregate is a specific limit within a contractor’s CGL insurance policy that applies to each individual project. It is a separate limit of liability that protects the property manager, building owner, or coop from claims arising from a particular project. This means that the coverage for claims related to that project is capped at the specified limit, providing an additional layer of protection.
Enhanced Protection for Project-Specific Risks:
Each construction project poses unique risks and challenges. By requiring contractors to carry a per project aggregate in their CGL insurance, property managers, building owners, and coops ensure that adequate coverage is in place for the specific risks associated with each project. This targeted approach minimizes the potential financial impact on the entity in case of accidents, property damage, or injuries that may occur during the project.
Risk Management and Cost Control:
Having a per project aggregate in contractor insurance contributes to effective risk management and cost control. It allows property managers, building owners, and coops to better assess and manage the potential risks associated with a project. By defining specific coverage limits for each project, entities can make more informed decisions and allocate resources accordingly, ensuring that they are adequately protected without incurring unnecessary costs.
Protection against Policy Exhaustion:
Without a per project aggregate, a contractor’s general liability policy could be exhausted by claims from other projects, leaving little or no coverage available for a specific project. This situation can leave property managers, building owners, and coops vulnerable to substantial financial risks. Requiring a per project aggregate mitigates this concern by ensuring that the contractor’s policy is dedicated to the project at hand, providing ample coverage for potential claims.
Contractual Compliance and Legal Requirements:
In certain jurisdictions or project contracts, there may be legal requirements or contractual obligations that necessitate the inclusion of a per project aggregate in contractor insurance. By enforcing this requirement, property managers, building owners, and coops ensure compliance with legal standards and contractual obligations, minimizing potential disputes or liabilities that may arise from non-compliance.
Conclusion:
Requiring contractors to have a per project aggregate in their CGL insurance is of paramount importance for property managers, building owners, and coops. It enhances protection against project-specific risks, contributes to effective risk management, and allows for better cost control. Furthermore, it safeguards entities from policy exhaustion and ensures compliance with legal and contractual obligations. By prioritizing this aspect of contractor insurance, property managers, building owners, and coops can safeguard their assets and mitigate potential financial risks associated with construction projects. Working closely with insurance professionals and legal advisors can provide further guidance on the specific requirements and implications of per project aggregate coverage.
