“Contractor start-ups are focused on budgets,” said Filip Ambroziak (pictured), insurance broker at Ambroziak & Rao Insurance Brokers Inc. “So if I ask whether they do asbestos work and they say yes, the price is so much higher. Often contractors will just say, ‘I don't do asbestos that much anyway, I'm just going to completely stop doing it.’”
For many new construction contractors, steering clear of high-risk jobs like asbestos removal isn’t about safety – it’s about staying in business. But the insurance implications of those choices are often poorly understood.
“A lot of companies – when you're requesting quotes from underwriters – one of the stipulations is that any asbestos work is excluded,” Ambroziak said. “That would be considered very high risk.”
Even minor exposure – such as disturbing a single wall – can nullify coverage. “A lot of contractors, especially if you're hiring a one-man operation, I would not be surprised if most of them had that exclusion,” he said. “Whether they follow it or not is up to them, but the insurance company in most cases would exclude that type of work. You would have to get a specialist in. Their policies are likely a lot more expensive.”
That cost difference forces many start-ups to either avoid high-risk work entirely – or take it on without informing their broker. Both paths create uninsured liability. “If you're ever getting that kind of work done,” Ambroziak said, “verify with them – maybe get it in writing or an email. Are you insured for this? You don’t want any problems.”
Environmental coverage gaps can also arise from business operations offsite. Ambroziak cited a cabinet maker whose workshop required specific insurance due to chemical use. “That insurance policy had a lot of exclusions on which chemicals can and can’t be used,” he said. “As a broker, it’s super important to communicate that.”
“Start-ups sometimes take on jobs that come to them, especially when the economy is tough,” he said. “With more established operations, I find that the owners are very busy people. Insurance isn’t necessarily their priority.”
That inattention can lead to major oversights. Longstanding contractors with fleet policies often fail to update their broker when hiring new drivers. “Contractors with four or five vehicles, everything’s good, certain drivers assigned – they often forget to notify me of new drivers or employees,” said Ambroziak. “If someone with a bad record uses a vehicle and they weren’t added, that can cause huge problems.”
Similarly, firms expanding their operations don’t always adjust their commercial general liability (CGL) policies to match new assets or revenues. “They might start with $10,000 worth of tools and suddenly they’re purchasing excavators,” he said. “These are large oversights.”
Still, many start-ups opt for the lowest-cost coverage simply to meet bid or licensing requirements - plans that don’t grow with the business. This leaves brokers trying to fix problems after the fact, when claims are denied due to non-disclosure.
Whilst it is acknowledged that contractors are busy, it is important to dedicate time to letting brokers know of any updates. “They often forget to notify me, or miss details during renewal talks,” Ambroziak said. “But that’s where we see the biggest problems. If something goes wrong and it wasn’t disclosed, that’s when the claim gets denied. That’s where it hurts.”
Contractor insurance isn’t a one-time purchase. As operations grow or shift, so do the risks. Staying properly covered requires active engagement from both brokers and clients – not just at renewal time, but year-round.
