Many roofing coverage gaps are not missing policies. They are missing words. An endorsement (a page added to a policy that changes what it pays for) can carve out finished roofs, change how subcontracted work is treated or narrow the contract promises you can insure, and the declarations page (the summary at the front) will not show it. Crews with no workers' compensation of their own are another gap worth checking. Your own forms decide which of these apply to you. This guide is for buyers who inherited the seller's program and want a gap-by-gap checklist. The core stack is in our first guide on roofing company insurance.
The short answer
- Gaps worth checking sit in the endorsements: designated work, the subcontractor exception, professional services and insured contract wording.
- Finished roofs are a separate question. Which year's occurrence policy responds depends on when the damage happens.
- Uninsured subcontractor crews can land on you at audit and at claim time. Collect certificates and written subcontracts.
- Some problems are not insurance gaps: your own defective work, warranty promises and lost demand.
- Read the full policy forms. Any change in terms needs the carrier's agreement, and a quote is not coverage.
Which gaps should a new roofing company owner check first?
A gap in a roofing program is often a narrowing word rather than a missing policy. Standard forms come from the Insurance Services Office (ISO), and carriers can attach endorsements that change them. Form numbers that begin with commercial general liability (CG) are the ones to know. Ask for the full endorsement list and check each row below against it. The first table covers finished work and contract promises. The second covers crews, fire, weather, vehicles and fraud.
| Gap | What it can do to you | What to look for, and what to ask |
|---|---|---|
| Completed roofing is carved out | A leak claim on a finished roof can be denied or limited | Look for: a designated work exclusion (CG 21 34) or a carrier's own roofing or completed work limitation that lists roofing in its schedule or wording. Ask: whether the carrier will remove or narrow it, and at what change in terms. |
| Subcontractor exception removed | Damage to the finished job that results from a subcontractor's defective roofing may be denied or limited, although the standard form can respond to it. The cost to redo the defective work itself is generally not covered either way. The endorsement does not take away coverage for injury to people or damage to other property, such as the owner's ceilings, floors and contents, which the policy may still address depending on its terms | Look for: an endorsement such as CG 22 94 replacing the damage to your work exclusion. A form lookup page says it is most often seen on homebuilders and condominium developers, so on a roofing policy it is a question to ask, not an expectation. Ask: whether subcontracted roofing is treated like your own, and whether any customer contract requires completed operations coverage on a standard form. |
| Design or inspection work | A claim over professional design, engineering or specification work may be disputed under a professional services exclusion | Look for: an exclusion such as CG 22 79, which as described on form lookup pages targets engineering, architectural or surveying services. Read whether its wording reaches your design or inspection work. Ask: whether a professional liability policy fits, what its retroactive date is, and whether roof condition reports or specifications you provide fall inside the exclusion. |
| Indemnity promises uninsured | You signed a hold harmless clause the policy does not support | Look for: narrowed insured contract wording such as CG 21 39. Ask: whether the contract promises match the policy wording. |
| Customer endorsements missing | A contract asks for completed operations additional insured status, and the policy has ongoing operations only | Look for: an endorsement list that shows CG 20 10 but no CG 20 37 or a blanket form. Ask: which endorsements apply to which customers. |
| Gap | What it can do to you | What to look for, and what to ask |
|---|---|---|
| Uninsured crews | A sub's worker is hurt, or an audit adds the sub's payroll to yours | Look for: gaps or expired dates in the certificate file. Ask: whether each crew has its own workers' comp policy. |
| Hot work conditions | A torch fire claim is questioned because a policy condition about a fire watch or extinguishers was not met | Look for: a hot work condition, warranty or exclusion in the endorsement list. Only the policy itself shows whether one is attached. Ask: whether the policy has hot work conditions and what the crew must do to meet them. |
| Open roof in bad weather | Water damages a customer's contents when a tarp fails, and the deductible and any contract waiver decide who pays | Look for: the deductible amount and any waiver or indemnity clause in the customer contract. Ask: what the deductible is per claim and whether the contract shifts the loss. |
| Equipment and trailers | Stolen lifts or tools are not covered the way the owner assumed | Look for: equipment missing from the floater schedule, or odd theft conditions. Ask: about terms for owned, rented and trailer-stored equipment. |
| Weight and use of trucks | A loaded dump trailer crash raises limit or regulatory questions | Look for: weight ratings on the auto schedule that do not match the real trucks. Ask: whether any truck, or truck and trailer combination, has a weight rating or an actual loaded weight of 10,001 pounds or more (whichever is greater) and is used in interstate commerce, which makes it a federal commercial motor vehicle. |
| Pollution and old materials | An asbestos or chemical claim hits the pollution exclusion | Look for: a pollution exclusion on general liability, with no separate policy. Ask: what a contractors pollution policy covers, if any. |
| Payment diversion fraud | A fake materials-supplier email redirects the payment for shingles or membrane ordered for a surge of storm jobs | Look for: social engineering listed as a small sublimit or missing from crime and cyber coverage. Ask: what the sublimit is and what call-back steps the carrier expects. |
The ISO form numbers come from lookup pages that describe each endorsement. They are pointers for your broker, not wording to rely on. Your policy's own text controls.
Is the work the seller already finished covered?
Possibly, and this is the question to answer before you close. In a standard occurrence policy, coverage depends on when the damage happens, not on when the crew installed the roof. A roof the seller's crew finished two years ago can leak next spring. Which year's policy responds, and whether a carve-out applies to that policy, are the facts that matter. A purchase agreement can shift the cost back to the seller through an indemnity or escrow, but insurance generally helps with unknown claims, not known ones.
A hypothetical example. A commercial owner's contract requires completed operations additional insured status. The inherited policy carries the ongoing operations endorsement only, and the policy also schedules completed roofing work in a designated work exclusion. Four years after the seller's crew installed the roof, the owner finds $150,000 of ceiling and flooring damage. The additional insured endorsement may not protect the owner for that work, and the exclusion may leave the company itself without coverage. Unless the exclusion turns out not to reach the claim, or the purchase agreement puts the loss on the seller, the company itself may have to pay. Changing the forms at renewal helps with future damage, not with damage already found.
That scenario is a good reason to read completed operations claims from the seller's past jobs and who covers old claims in a stock or asset deal. Whether a claim is brought at all also depends on each state's time limits for construction claims, which a construction attorney can explain.
Where do subcontractor crews open gaps?
Many roofing companies use self-employed crews. The Bureau of Labor Statistics (BLS) counts about 20 percent of roofers as self-employed. If a crew has no workers' comp policy, the premium audit can charge the company for that crew's payroll, and state law may make the company responsible for an injured crew member. How the audit math works is in workers' comp, payroll and class codes for a roofing company.
The best defense is a certificate file that is current for every crew on every job, plus written subcontracts. Our guide to whether your subcontractors carry the required coverage and contractual risk transfer for subcontractors show how to build it. For classification questions, see inherited wage and hour exposure.
How do I find these gaps in my own policies?
The document-gathering steps (full forms, the certificate file, the open job list) are in the first-30-days list of our core insurance guide for a roofing company. The declarations page alone hides endorsements, so do not stop there. Three steps are specific to roofing gaps.
- Highlight every endorsement that names roofing, completed work, hot work, professional services, subcontractors or insured contracts, and note the classification the carrier used to rate general liability and the residential or commercial split it assumed.
- Mark every contract requirement for additional insured status, primary wording, waivers and limits, then compare each one with the endorsement list, not with the certificate.
- Ask the broker to write a plain list of what closing each gap would cost and what the carrier says. A quote is not coverage, and any new terms need the carrier's agreement.
Morrow can read the full forms with you, flag the endorsements above and request quotes where a gap is worth closing. Any new terms depend on carrier underwriting. For a broader approach, use how to find coverage gaps as a new owner and exclusions that quietly kill coverage. Review it with a broker who reads contractor forms for a living, as described in how to choose a broker for a roofing company.
Which problems are not insurance gaps at all?
Some problems that feel like coverage gaps are not insurance problems at all, and a new owner should price them in other ways.
| Problem | Why insurance may not respond | Where to turn |
|---|---|---|
| The cost of redoing a defective roof | A standard liability policy responds to injury or damage to other property, not to the cost of redoing your own work | Workmanship warranty reserves, the purchase price, indemnity and escrow terms |
| A workmanship or manufacturer warranty promise | A warranty is a promise by the contractor or manufacturer, not insurance | Warranty terms in the contracts and the seller's open warranty claims |
| A slow storm season or a lost referral channel | Business income coverage responds to direct physical loss to property, not to lost demand | Quality of earnings work and the lender conversation |
| Insurance-claim marketing problems | Offering deductible waivers or adjusting claims can raise licensing or consumer protection exposure in states that ban it, and these are generally not insured losses | A construction attorney reviewing the seller's past marketing |
| A license that lapses when the qualifier leaves | Insurance does not replace a license | License counsel and the state licensing board |
For marketing, one example from the statutes: Florida bars contractors from offering to waive an insurance deductible, and Texas limits a contractor's role in adjusting an insurance claim. Whether any past practice matters depends on the state and the facts, so ask counsel rather than the broker. Licensing is covered in contracts, licenses and bonds for a roofing company.
Keep reading
- Just Bought a Roofing Company? Your First 30 Days of Insurance
- Contracts, Licenses and Bonds for a Roofing Company
- Workers' Comp, Payroll and Class Codes for a Roofing Company
- 15 Coverage Gaps New Owners Find in Owner-Run Businesses
- Completed Operations Claims From the Seller's Past Jobs: Who Pays?
- All guides for new business owners
Frequently asked questions
What is the clause that removes coverage for finished roofs (a designated work exclusion)?
It is an endorsement that removes coverage for the work listed in its schedule. A form lookup page describes ISO form CG 21 34 as removing products and completed operations coverage for scheduled work and names roofing as an example. Read your policy to see whether it is attached and what it lists.
Does general liability cover water damage if a tarp fails on an open roof?
It may respond to damage to other people's property, subject to its terms, exclusions and deductible, and the customer contract may shift the loss through a waiver or indemnity clause. Read the policy and ask the carrier about any roofing or weather-related conditions.
Are my subcontractors' injuries my problem?
They can be. Where a subcontractor has no workers' compensation, the audit may charge you for its payroll and state law may make you responsible for its injured workers. The rule depends on the state, so keep current certificates and written subcontracts.
Can I close a gap after I buy the company?
Often you can ask, but terms depend on the carrier's underwriting and on your loss history and operations. Removing a carve-out may change the price or the markets you can use. Ask your broker to request quotes and treat any new terms as pending until the carrier binds them.
Will the seller's indemnity in the purchase agreement fill a gap?
It may help with known or unknown claims for work done before closing, depending on how the agreement is written and on the seller's ability to pay. Ask deal counsel how indemnity, escrow and survival periods apply to roof leaks and warranty claims.
References
- InsuranceXDate: CG 21 34 Exclusion, Designated Work (form lookup page)
- U.S. Bureau of Labor Statistics: Occupational Outlook Handbook, Roofers
- North Carolina Rate Bureau: Basic Manual, Rule 2, Premium and Payroll (NCCI, NC edition)
- Florida Legislature: Fla. Stat. 489.147
- Texas Public Law: Tex. Ins. Code 4102.163
- Cornell Legal Information Institute: 49 CFR 390.5, definition of commercial motor vehicle
- InsuranceXDate: CG 22 94 Exclusion, Damage to Work Performed by Subcontractors on Your Behalf (form lookup page)
- InsuranceXDate: CG 22 79 Exclusion, Contractors Professional Liability (form lookup page)
Just bought a business? Get your insurance reviewed.
Send Morrow the declarations pages, loss runs and key contracts you inherited. Morrow can review them against the business you bought, flag gaps and request quotes where it makes sense. Any new terms depend on carrier underwriting.
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This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.