Qualifying Contractors

Bob Vancura

When selecting a roofing contractor to recover or reroof your facility, prequalifying a contractor to perform the task is of utmost importance. While other professionals such as electricians, plumbers and HVAC mechanics have educational and training programs to maintain their skills, roofing contractors have very few. In addition, minimal capital is required to become a roofing contractor, resulting in an "ease of entry - ease of exit" syndrome. The National Roofing Contractors Association (NRCA) has disclosed a 25 percent turnover in their membership roster on an annual basis. That translated into a 100 percent turnover in contractor membership every four years.

For these reasons, owners and managers need to consider several factors when seeking a qualified contractor. Appropriate insurance, whether or not the contractor is bonded, and the contractor's history all play important roles in the prequalifying process. It's important a contractor has insurance coverage necessary for the liability exposures associated with a roofing application. The coverage and insurance limits may vary relative to the work being performed.

Risk management divisions of many corporations have established policies for all contractors performing work regardless of contract size. When this is the case, the owner has few decisions to make. However, if insurance coverage is not mandated by rick management, the owner must review several items.

Form of insurance, policy limits, and endorsements for each line of insurance protection are just a few examples.For instance, all general liability policies should have a one million dollar per occurrence and a two million dollar per job site aggregate endorsement. In addition, you as the building owner or manager should be names "Additional Insured" in lieu of "Additionally Named Insured" on your contract policy. Under "Additionally Named Insured," you are actually part owner of the contractor's policy, which carries certain contract provisions with the insurance carrier. For example, you would be obligated to report all claims within a certain specified period of time in order to be covered under this policy.

If asbestos is an issue, only one insurance carrier today has eliminated the asbestos exclusion int heir general liability policy. Therefore, it's likely the contractor does not have asbestos insurance. This can be obtained under a separate liability policy, but it is very costly. Careful examination of these items should be noted on an insurance certificate.

Another important item is to make sure the contractor has the ability to obtain a surety bond. This is an excellent way to check on the contractor's financial stability. If the contractor is bondable, ask what their individual project and aggregate limits are from the surety. The contractor may have a job limit of $200,000 for example. This is an unusually small number, and should give an owner an indication that the size, financial stability or strength of relationship with the surety company is minimal.

If the contractor is bonded, ask for the surety company's rating. Surety companies vary greatly and are rated on their capital reserves and abilities to meet obligations arising from a bond default. An owner or manager should always check into the contractor's history. Ask how long the contractor has been in business. Since roofing can be volatile business, it's important to know if the contractor has the ability to withstand the ill effects of a job gone sour. As with manufacturing warranties, a contractor has a two year obligation to perform repairs under the terms of the warranty and applicator's agreement from the manufacturer. if the contractor hasn't been a viable entity for a period of time, while they still are around when a request for service is needed during the first two years after application.