Property Preservation Contractor Insurance

Property preservation insurance is a type of insurance that protects preservation contractors. If you do any of the following, you may need this type of coverage:

• Building cleanup (inside and out)
• Building restoration or remodeling
• Working on foreclosed properties

Any time that you restore or work on a structure or the grounds of one that is considered to have historical value, you’ll need to have preservation of property coverage. The coverage will provide a safeguard that:

• Protects local property values if the building falls into disrepair
• Protects financial institutions that rely on the structure for asset value

Preservation contractors can limit their risk of a lawsuit if the property falls into disarray, even if it’s no fault of your own, such as further damage while waiting for permit approvals.

Note: You may need preservation insurance if you work on foreclosed properties for the lender who plans on restoring and selling the property afterward. You may be hired to preserve the state of the property until it sells, too.

How Much Does Property Preservation Contractor Insurance Cost Per Year?

Property preservation contractor insurance costs will vary based on policy limits, past claim history, size of your business and other factors. Costs average:

• $70 – $75 per month for a $1 million limit per occurrence and a $1,000 deductible
• $100 – $150 per month for a $2 million limit per occurrence and a similar deductible

Most contractors will opt for a $2 million limit when working in a high-cost-of-living area or properties with higher values.

Types of Insurance to Consider as a Preservation Contractor

Property preservation insurance is just part of the insurance that you’ll require. Asset owners who hire you will often require proof of insurance before considering your bid for a job. The historical value of a property is not something that you can replace with ease if errors are made during preservation.

You’ll likely need some or all of the following coverages:

General Liability Insurance

The most basic form of insurance that you’ll want to obtain and potential employers will ask for is general liability insurance. Coverage will include:

• Bodily injuries: If an owner or stakeholder of the property is on the premises and they slip and fall due to you leaving a bucket on the floor or the floor being wet, bodily injury coverage will kick in. This form of insurance will cover medical expenses relating to the incident. This form of insurance will extend to all “customers.”
• Personal injury: Physical injuries are not covered by personal injury. Instead, things such as libel, false arrest or slander would be covered.
• Property damage: Any form of property damage that occurs while working on the property will be covered. For example, if an employee breaks a window, this coverage will cover the cost of the damage.

Many general liability plans can cost $42 – $90+ per month. Your costs will depend on your limits, history of past claims and state you reside and work in.

Professional Liability Insurance

Property preservation contractors should also have professional liability insurance, also known as “errors and omissions insurance.”

Generally, banks and REO companies will give contractors 30-60 days from the start of the contract to obtain this coverage, so it’s non-negotiable in most cases.

But it’s a coverage that you’ll want to have because it protects you for work that includes:

• Removing and securing the contents of a vacant property
• Trash-outs
• Maintenance work
• Minor repairs
• Winterization (where applicable)
• Changing locks
• Lawn care

If you make a professional error while carrying out any of these tasks (or any covered tasks), then professional liability will cover the expenses of a lawsuit.

Let’s say, for example, that one of your employees inspected a property, but missed the signs of black mold in the basement. The owner discovers that the property cannot be sold until the mold has been removed, which will require extensive work. As a result, the owner sues your business for negligence. In this case, errors and omissions insurance would help cover these legal costs.

Depending on the policy, professional liability coverage may be included in a general liability policy.

But when purchased separately, errors and omissions insurance will typically cost about $81 per month or $1,000 per year.

Workers’ Compensation Insurance

If you have employees, you will likely be required to have workers’ compensation insurance. In fact, only one state does not require this type of insurance (Texas). Even if you operate in Texas, you’ll still want to consider workers’ comp.

Your employees face the risk of injury every day they’re on the job, and without workers’ compensation coverage, your business could be on the hook for their medical care or lost wages if they are injured.

Workers’ compensation covers:

• Medical expenses
• Rehabilitation costs
• Lost wages

If an employee is killed on the job, then this insurance will provide benefits to the surviving family.

For most businesses, workers’ comp is a necessary insurance. Expect to spend about $140 per month for your coverage, or a little over $1,640 per year. Your exact costs will depend on a number of factors, including how many employees you have, your location, etc.

Tool and Equipment Insurance

Tool and equipment insurance is also known as inland marine insurance. For this industry, it’s a necessary insurance policy because your tools are vital to your work.

If your materials or tools are damaged in an accident, your commercial auto insurance policy won’t cover the cost of replacement or repairs. Tools and equipment coverage will ensure that your losses are covered.

Business Personal Property Insurance (BPP)

BPP covers you in the event that you take personal property to a job site or to a potential client’s place of business. For example, if you bring a laptop to show the breakdown of the cost of the preservation and something happens to your device, it will be covered.

All portable devices are covered.

You can expect to pay around $800 per year for BPP. Costs can be as high as $65 – $70 per month, but some insurers will offer significant discounts if you bundle multiple policies under one account.

If you do not bring portable, personal items to properties or out of the office, you won’t need BPP.

Property preservation insurance companies will provide you with quotes to help you determine the cost of your coverage. You can expect the insurance agent to ask you numerous questions, including but not limited to:

• How you plan on securing the property. For example, you may be asked if you have or plan to change the locks or add security cameras.
• Methods that you’ll follow to winterize the property and prevent potential pipe bursts or plumbing issues.
• Maintenance plans that you have in place for the properties that you’ll be working on.

Answering all of the answers honestly and with as much detail as possible will allow you to maximize your preservation of property coverage, limit your risks and keep policy premiums as low as possible.