HVAC contractor liability insurance for acts of terrorism?
It’s that time of year again, when my insurance carrier informs me that they will renew my contractor liability insurance policy and in doing so, send me a copy of the policy along with charges for the same.
This year I looked at the policy a little closer than I normally do and I noticed an item that really jumped out at me. On the very first page with the policy’s total premium was an itemized adder that I never noticed before…a $26.00 charge for something described as follows…
TERRORISM – CERTIFIED ACTS $26.00
The COMMERCIAL POLICY FORMS AND ENDORSEMENT SCHEDULE referred me to a form which is titled CAP ON LOSSES FROM CERTIFIED ACTS OF TERRORISM.
Well, as you could expect, the form was legalese and virtually incomprehensible to anyone but a lawyer…I could tell my own insurance agent wasn’t sure what all of it meant.
Let me just say now that this article is NO indictment of my insurance provider or my agent. If you read my newsletter of July / August 2013 you know what a great job these people have done for me in the past and I trust them completely.
OK, back to the point of this article…
After reading the legalese a few times I thought I had a sense of what the policy was saying but I wanted to get my agent’s take on it. I emailed Scott and at first he gave me what I will call legalese-ease…slightly less mumbo-jumbo.
I wasn’t satisfied with that and I told him I really need to understand the policy because I found the inclusion of a rider for an “act of terrorism” for an HVAC contractor’s policy to be interesting…so much so I wanted to write an article about it.
I emailed Scott my take on the policy as I understood it and ultimately he agreed with my assessment. Here it is…
Should my HVAC business be the victim of an “certified act of terrorism” as defined by the US Department of Homeland Security, and the total of all claims for that single act are not greater than $100 billion and my single claim is less than $5 million, then, and only then, would my claim be considered for payment.
So, this is where I feel the conversation gets interesting…
What are the chances of an HVAC contracting business being the target of a terrorist attack? I think we can all agree my little heating and cooling business has little to no chance of being targeted by a terrorist or terrorist group…and think the same is true for your business.
That said, I imagine my business could be what they call “collateral damage” in a terrorist attack but if that were the case I’m probably not going to be around to make a claim. Frankly, we’re probably talking about an event of unprecedented scale.
So, what has the $26.00 bought me? In my humble opinion…NOTHING.
Keep in mind, I do not have the option of declining this additional insurance…if I don’t pay it, my policy is simply not renewed and I can’t operate my business and maintain my license without the insurance.
My agent says my policy has had this rider in the past, I just didn’t notice it before…I’m sure he is right. He also says all insurance companies are adding this to their polices…again, I’m sure he is right.
So, what did the $26.00 get the insurance industry? Approximately $26.5 million!
According to IBISWorld™, one of the world’s leading publishers of business intelligence, there are approximately 102,623 HVAC contractors in the US. If all of them are paying the $26.00 the net result for the insurance industry is approximately $26.5 million!
There should be no surprise to you that there is a federal government ingredient to this…
The Terrorism Risk Insurance Act TRIA of 2002, as I understand it, created a shared public and private compensation for insured losses resulting from acts of terrorism. This was done in response to insurance companies refusing to cover acts of terrorism post 9/11 because of the unprecedented damages, ($40 billion), resulting from the attacks of 9/11. The TRIA required insurers to offer terrorism coverage…the key word there being “offer.”
I admit to you that I’m struggling with this. Is this the price we pay post 9/11 to conduct business in our communities? Should I be glad that such insurance exists and just accept it and move on?
It would be easy to vilify the insurance industry and maybe they deserve some skepticism…maybe they have earned it. I don’t think that is what’s bothering me here however…it feels like something much bigger yet less tangible.
Post 9/11 my wife and I haven’t been to an Army football game because getting onto the US Military Academy campus at West Point has become such a hassle. I am in an airport at least twice a week, 7 months out of the year and I am reminded each time of what happened to air travel post 9/11. Watching or reading the news has become a daily lesson in the global consequences of a post 9/11 world.
…and now $26.00 for terrorism insurance.
One more thing which I will absorb and bury into my subconscious and move on from.
There it is…there is the root of why this $26.00 charge is bothering me so. It made me examine how I have changed in the last fifteen years and how much I have unconsciously adapted, absorbed, buried and it saddens me.
The five most common statements you hear about Variable Refrigerant Flow VRF systems….truth or urban legend?
In my April / May 2015 newsletter I started a five part series addressing what I believe are the most common perceptions and misconceptions about VRF systems.
- VRF is strictly for commercial applications…
- VRF requires special training…
- VRF needs to be installed by big contracting companies with an engineer on staff…
- VRF equipment is very expensive…
- VRF is new to the U.S. market…
OK…let’s continue with “VRF requires special training”
Virtually every VRF manufacturer has established a prerequisite training program required before one can purchase the equipment…or at least that is how it was supposed to work. The reality is in each of the six VRF trainings I have attended myself, I would estimate that 90% of the class was techs and installers who had already installed a VRF system and / or were servicing a system they inherited. The manufacturers were all well intended but the reality was that commercial systems were specified, jobs were awarded and deadlines had to be met and a “we’ll get the training later” attitude prevailed.
The bottom line is special training is required for VRF to be installed correctly.
Joseph Runyon, former president of the Tennessee Valley ASHRAE chapter, had a great post this past August in the VRF and Ductless HVAC Technology group of LinkedIn titled, “Consulting Engineers’ Increasing Reluctance to Design with VRF/VRV.”
Here is an excerpt from Joseph’s post…
“As the outgoing president of our local ASHRAE Chapter, I recently attended the Regional Conference serving as the Delegate. Our region is comprised of chapters from 7 Southern states. During the 3 days of the Conference, I made it a point to talk with consulting engineers during breaks and social settings. I repeatedly asked the same question and received basically the same answer.
Question: ‘How many projects are you designing using VRF/VRV?’
Answer: ‘I have only used it 2 times.’
Follow up question: ‘Why?’
Common answer: ‘It is more than obvious that contractors do NOT know how to install these systems. Now I have very unhappy client with a system that either does not perform as it should.’
Let me repeat their common answer as to why they are no longer designing with VRF/VRV. ‘It is more than obvious that contractors do NOT know how to install these systems.’
Because we are often called in to work on many disasters, I can vouch for these frustrated engineers.
Regardless of the quality of the product, it is only as good as the installing contractor. Let’s face it; quality sells! Manufacturers provide a reliable Product… But the quality of that Product is determined by the last hand to touch it”.
You can see Joseph’s post in its entirety along with comments from other group members at this address…
I think I have uncovered one of the problems with VRF training that may be keeping installers from attending classes. Most industry VRF classes are multi day affairs. As business people, it’s hard for us to get away for one day nevertheless two or three.
Having attended several industry VRF classes to date, one common theme which keeps coming back to me is this…”why do manufacturers have multi day training classes that if they were conducted efficiently and courteously, they could be done in a single, full day of instruction?”
Virtually all the VRF manufacturers are guilty of this.
By “conducted courteously,” I mean that I find it highly discourteous when anyone wastes an installer’s time under the guise of “training.” I take the time you spend with me VERY seriously and I do everything in my power to make the 3 – 4 hours I have with you productive…and have a little fun while we do it, of course!
I am determined to create a single, full day curriculum for my VRF class. I am convinced four hours in the morning with one break and four hours in the afternoon with one break is all that will be required.
AHR Expo, January 25 – 27, Orlando, Florida:
Monday, January 25 from 2PM – 6PM
Tuesday, January 26 from 10AM – 2PM
Wednesday, January 27 from 1PM – 4PM
Please drop by the booth and say hello if you’re at the show.
New class dates posted:
Congratulations to the 2015 ACHR The News Trainer of the year:
As the 2014 trainer of the year as awarded by the ACHR The News magazine, it brings me great joy to congratulate the 2015 recipient…John Barba of Taco. John is a great friend and a great trainer. You can read all about John at this address…
A great website for car guys / gals:
If you’re a car guy / gal, I strongly recommend you check out the website, www.bringatrailer.com and sign up for their daily emails. I’m a big time car guy and my wife actually discovered this site, (she is a big time car gal). I pride myself in knowing a fair amount about fairly obscure autos from around the world but BAT each day turns me onto something I have never seen before and that is so cool!
See you soon!
The views and opinions expressed in this newsletter are those of the author and do not necessarily represent those of ESPCO’s sponsors and training partners.