Is $2 million enough liability insurance?

Do you think you have enough liability coverage? Most companies now have $2 million on their commercial general liability policies.

A court case in the Supreme Court of British Columbia recently found Sur-Del Roofing Limited responsible for a 2004 fire that destroyed a Mennonite Church in Abbotsford, B.C. On December 11, 2004. Sur-Del's subcontracted crew, led by Chris Hutchings, were working on replacing a flat roof section of the church.

The work required the old roof to be removed, then three layers of new material to be applied. The material agreed-upon "20-year Torchflex System" specifies a fiberglass fireproof underlay. This underlay is followed by a base layer and then a cap. Torching is used to adhere the products.

The B.C. Fire Code requires a 60-minute fire watch following the completion of the work when torching is used. The Code also requires a final inspection of the area four hours after work finishes. There is also a requirement that floodlights be used when torching is performed after dark.

The circumstances were that the roofers claimed to have finished torching by 4:00 p.m., a few minutes before sunset. Hutchings has said he then conducted a two-hour fire watch while he cleaned up and prepared for the next day's work. He said he checked for any hot spots with his bare hands twice. He left the site at about 6:00 p.m. and was home in Langley, about an hour’s drive away, by 7:00 p.m.

This statement was disputed when two nearby neighbours testified that torch work continued, without floodlights, until 6:00 p.m., when the crew left for the day.

At about 10:00 p.m. that night, the church's fire alarm sounded, but by the time the fire crews arrived, the fire was too far advanced to save the building.

Justice Loryl Russell believed the evidence of the neighbours and fire experts, finding the roofing company responsible for the fire due to its negligence in failing to apply the fireproof base layer, failing to conduct even a one-hour fire watch, and failing to illuminate the area sufficiently when work continued after sunset. The award was made for $2.3 million in damages plus costs and interest.

Claims can exceed $2 million coverage. Are the jobs that you take open to this type of loss? Talk to your insurance agent or broker about the cost to add an extra million or so to your policy. You may also consider an umbrella policy. Ask the questions and get the answers. You need to have control of your insurance.