On the Hook
Dealers are responsible for the contractors they hire, regardless of whether they want to be.
Florida is one of several states that require licenses for contractors. Georgia joins that group in 2008. Those statutes, says Matthew Perry, senior project manager for pro dealer VNS Corp., which is headquartered in Vidalia, Ga., are based on regulations already in place in South Carolina, “and we do a lot of work there.” Perry hopes these and other nearby states, like Tennessee and Alabama, will accept each other’s contractor licenses. Otherwise, qualifying subcontractors in markets where VNS is installing products could become arduous.
Finding labor, licensed or not, is a perennial problem for every dealer offering installation, especially as states crack down on undocumented workers. But stricter scrutiny of contractor licensing and hiring practices could be a blessing in disguise for dealers, in light of their potential liability exposure when installing for their builder-customers. “If one of our contractors get, sued, you can bet we’ll get sued the next day,” says Rick Ariail, director of installed sales for Rome, Ga.?based Wheeler’s.
Mike Butts, president of LBM Solutions, recommends that dealers develop “scope of work” contracts that specify contractors’ responsibilities and liabilities. He and other sources also say that dealers should be named on contractors’ insurance policies as “additional insured,” to further shield their companies.
Most dealers contacted for this article require contractors to present certificates of insurance that prove they have at least $1 million in liability coverage and at least $500,000 in workmen’s compensation coverage. (That’s typically what dealers themselves carry when they use their own employees as installers.) Jim Hynes, vice president of risk services for Indiana Lumbermens Mutual Insurance in Indianapolis, says that aside from general liability insurance, dealers that install need “product and completed operation” coverage, which encompasses bodily injury or property damage caused by flawed products or their installation. Hynes adds that the level of a dealer’s training and jobsite supervision also can affect the cost of insurance. Without supervision, he says, “dealers might have a hard time finding an insurer to underwrite their policy.”
–John Caulfield
