PF&M AT A GLANCE
The American Association of Insurance Services (AAIS) Artisan Program Policy combines a number of coverages for eligible artisan contractors in one easy-to-rate form. It is a specialty program that provides most of the usual coverages needed by small to medium-sized artisan contractors. The policy includes commercial liability, property and time element coverages, plus endorsements and coverage options that allow for customizing the policy to meet the specific needs of individual policyholders. This program provides an alternative to the more traditional commercial package policy for the eligible classes of business.
Comparing the Artisan Program to the Businessowners Policy
The major differences are:
• Eligibility: The Artisan Program applies to only a specific number of eligible small to medium-sized artisan and trade contractors. The AAIS BOP eligibility guidelines exclude contractors completely.
• Coverage forms: The Artisan Program Policy has a single coverage form that covers property on an “all-risk” basis, subject to certain specific exclusions, and commercial liability coverage similar to the coverage in the AAIS BOP Policy. The property coverage under the AAIS BOP offers two forms—one a named peril and the other an “all-risk” policy, subject to certain exclusions.
• Mandatory coverage: The Artisan Program requires commercial liability coverage. Property and time element coverages, while available, are optional. The AAIS BOP Policy requires both property (and time element) and commercial liability coverages.
• Liability coverage: The liability coverage forms in the two programs differ slightly from one another in arrangement and language, but both provide coverage for losses arising from bodily injury and property damage (including products and completed work hazards), premises medical payments, fire legal liability, personal injury liability and advertising injury liability. Under the Artisan Contractors form, supplemental liability coverages for contractual liability, incidental medical malpractice and mobile equipment coverages are included as well as provisions for defense costs.
• Property coverage: Both programs cover scheduled buildings and business personal property, as well as earnings and extra expense coverage. Extensions of coverage and additional coverages are similar except that building property off premises is not provided in the Artisan Program.
• Rating approach: Both programs have a simple, two-step procedure for rating property coverages. In the BOP, this process automatically includes premiums for the liability coverage. In the Artisan Program, the liability coverage must be rated separately.
Each program has additional coverage endorsements and options available to tailor the coverage to match the needs of eligible risks. Earthquake, employee benefits liability, automatic increase in limits and ordinance or law extension are examples of additional coverages available in both programs. The Artisan Program has options to apply the aggregate limit to each individual project or to limit (or exclude) coverage for certain designated premises or operations. In addition, there are three Artisan Property Additional Coverage Endorsements (APACE), each of which provides a combination of commonly requested coverage options in a single endorsement. The coverage provided and limits of insurance for each coverage differ by endorsement.
General eligibility guidelines
AAIS lists 66 specific classes of contractors eligible for coverage under the Artisan Contractors Program. In addition, annual sales or receipts cannot exceed $3 million, payroll cannot exceed $500,000, buildings can be no larger than 15,000 square feet and the contractor cannot work on projects where the construction costs exceed $1 million. Eligible contractors cannot have more than 10 full-time and part-time employees. The definition of full-time employee differs from standard definitions in that the employee must work only 120 days per year to be considered full time.
Excluded from eligibility are general contractors, contractors engaged in building moving or building demolition and contractors that lease or rent equipment to others. Contractors that are joint ventures must be referred to the insurance company for underwriting.
Since these are AAIS guidelines, individual insurance companies using the program may impose their own restrictions or requirements in addition to those listed above.
Please note that this is only an overview of this coverage. A thorough discussion of this coverage form may be found in the PF&M Analysis from Rough Notes.
Agency OnLine subscribers, please refer to PF&M Section 195.4-2 AAIS Artisan Program Policy Coverage Analysis for a more in-depth discussion on this coverage. *