Hi all,
The state I live and work in (Idaho) has implemented a new law whereby any company doing more than $2000 at any one job needs to register with a newly formed Contractor’s Bureau. The idea is to weed out riff-raff…cool with me. Booming building market brings lots of flakes.
One of the requirements is $300,000 business liability insurance. Many of my jobs are less than the $2000 threshold, but I’ll get it anyway…a good selling point to a potential client, and a good idea.
My question is what should I be paying for said insurance? One man band,sole proprietor, mostly cabinets and trim carpentry. I was quoted $939 annually for $300K liability and $20K coverage on my tools. Seems like an OK deal, but I’ve no basis for comparison. That was from State Farm, where I’ve got house, auto etc. Should I look elsewhere? Who do you use and trust?
PJ
Everything will be okay in the end. If it’s not okay, it’s not the end.
Edited 1/10/2006 7:51 pm ET by PeterJ
Replies
My liability policy is ~$800 a year for $1million in coverage through Donegal.
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It's only satisfying if you eat it.
I pay $950 for a million and $105 for a 10k bond. It is somewhat regional as well as makes a difference what you are doing. In my area GC's pay the most followed by roofers. DanT
I am waiting on quotes from 5 carriers as we speak. I was ball parked a figgure of under a thou for 1 million coverage, payable quarterly, but no firm calls back.
Wow! I have a million in liability, about $8k in tool coverage, some work comp for my part time help, and coverage on my truck, for about $3k per year.
No point in throwing quotes out there without mentioning the gross volume that they're based on. My premium is based on my gross receipts for the year, with the volume of subcontracted work and the amount of payroll factored in. For $1M aggregate, non-owned auto, and a small tool rider, assuming $350K gross per year with $100K subs and $50K payroll (aside from me) the premium is just shy of $5K, or about 1.5%.
At the end of the policy year the premium is adjusted based on actual gross (I give them a projected figure at the beginning of the year).
Don't even ask about the exclusions, and if I wanted to show you the policy itself I'd have to use a crane to pull it out of the filing cabinet.
Here's an interesting article on insurance:
http://www.westernconstructionlaw.com/OwnerConfusesCGL.shtml
My first insurance co. based prices on gross, not this one. I'm still a little guy, this will be my second year out there all alone. I still have yet to break 100k for a year but, my name is finally starting to get out there, so i'm anticipating even more this year.
Some days I cant believe I get paid for this, too cool!
No point in throwing quotes out there without mentioning the gross volume that they're based on.
Or what state you live in.[email protected]
It's Never Too Late To Become What You Might Have Been
Hey, cmon, I filled out my profile. I'm in Warren Mi.
Alrighty then, greetings from a former Ann Arborite. Had a girlfriend from Warren, we moved to CA together, where she met another guy. I have to say he probably is cooler than me, so good move on her part.
Anyway, I can't understand how your insurance company can rate you without knowing your numbers. What if you build $80K worth of small remodels this year and $800K worth of very expensive stuff next year? Isn't their exposure increased? Maybe your policy is for no employees or subs? They want copies of all my subcontracts and payroll records here.
I'm not sure what their doing. For as much as I try to stay on top of things, I tend to glaze over a bit talking to my insurance agent. I know my last company did year end audits and adjusted the rate to that. Now that I think about it, I may have done a projection of gross and if I go over the rate changes.
Which is essentially the same an a year end audit.
I am a small builder/remodel G.C. in New england and have 2m aggregate and about 5k for tools. I pay a lot because in the first two years of business there were money/management problems and I had two cancellations.Never ever ever ever let your insurance lapse.They also don't like people who hire subs and of course that's what we do.Your gross receipts, amount you sub out, what if any kind of equipment you use on the jobsite, the kind of contract you have, safety regs in place? Do you have history of working uninsured? Have you had a claim? What are the average rate of claims for your area and your type of work.very regional and dependent on scope of work as well.
One of my competitors here doing similar volumn with similar balance of crews and employees, said his liability was canceled because he had too high a volumn of subs vs employees.Hmmm....I asked my agent. She sounded confused by that, said maybe something else is going on...don't worry 'bout yourself.I found out later he treats his employees as subs. Appears that an auditor can pick up on that and assume that if you get shady in one way, you might be the kind who can try to screw your ins co.Probably your lapse of payment sent a similar signal so they re-rated you.
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Here in WA it's very simple... having insurance = being registered ('registered' is the term for 'licensed' here). Anyone can legally be a contractor here, all they need is insurance. In practical terms that makes the insurers the gatekeepers, and I would have had a very hard time getting a new policy for a new business when I moved here 3 years ago, aside from the fact that I had a long insurance history in CA.
If your insurance lapses for any reason you are immediately no longer a contactor. By state law a person who contracts without insurance has no legal recourse if they are not paid. There are still tons of guys running around contracting without insurance.
Dave: About no regulation of contractors and the control insurers have over the industry here and in your state.Exactly, the same thing here. There is no regulation of contractors whatsoever, so also, I think the liability is high considering the number of hacks in the business.I was in the de facto position when we built a house that was my "lesson" job and I lost nearly everything, but determined I kept on. I'm glad I did, got the job done and the customer is happy, but we skated on thin ice for over a year after that.I will re assess my rates when time comes to renew, no doubt about that. One thing is for sure, no one can say I can't pay with the rates I'm paying now.
I wouldn't say that WA does not regulate contractors. They do, and there are lots of laws about what we have to do, how, when, etc. It's just that they don't give any sort of test, as is done in CA, or have an experience measurement. As far as I know, few states have skills tests, most just have some sort of registration process, always involving fees, sometimes involving insurance and bonding. Here, the bar is high--insurance is expensive and tough to get. Actually that's part of why I think a lot of under-the-table 'contractors' work that way... can't get or afford insurance.The CA test is somewhat useful at screening people, but really anyone can pass it after taking a cram test. The best thing they do there is to require affadavits covering 8000 hours of journey level experience before they approve you for a test date. Of course, a lot of people just get other people to lie and sign the affadavits. Technically the state can do things like audit payroll records to verify your affadavit. When I got my license I needed about a dozen former employers to sign them.
What you're describing sounds just like what Idaho is implementing. To get "registered", you pay the state $30, provide proof of insurance and a notary stamp to prove who you are.
I'm all for the process, but wonder if it will really have any impact on the way things are done in the trenches. No leins, no recourse won't really keep the scmucks away, they sometimes just walk away from a job, anyway. I suppose educating the public to ask if you're registered is a possibility, but if someone wanted an easy target for shorting payment it would be the non-registered guy. After all, he has no recourse.
Hmmmm.....PJ
Everything will be okay in the end. If it's not okay, it's not the end.
We will start working in Mass and I have sent in my obligatory 200.00 to cover registration costs to be a "Registered Remodeler" as required by law - 100.00 and then a "guarantee fund" - 100.00.Seems like a good idea but there is not testing involved. When I filled out the paperowrk for the permit for the job and the "number" from the state, I caught on pretty clearly that it is a way for mass to track those who are non-compliant in the area of workman's comp and taxes. Fine fine, we all need to pay our fair share for the fireman, blah, blah. But I'd like to see a little more interest in consumer welfare.We just had looked at a job awhile ago where some poor naive folks were taken for a huge ride by a schister who had "lost" his registration number (thus legitimacy) and was using another number that lo and behold, was suspended as well. The two contractors were working with eachother and had multiple jobs going on and were apparently trading numbers around all over the state.The people were ineligible for the guarantee fund which could have given them a little $$ to repair the bad/unfinished work. But the hitch is that they DID make sure the contractor had a number to the best of their ability. SO one could really blame it on the muncipality for not doing their due diligence. Ever seen a muncipality take responsibiliy for their errors?ALSO...if you read Mass's website on the issue, they state that they do not shut down non-registered remodelers, simply those poor folks who hire them have no recourse with the state when they are fleeced. Sorta like Pontius Pilat of the bureacracy.As well, the license requiring testing in mass is only for construction projects of 32,000 sq. ft. and above, basically large commercial projects. OFten people confuse the two and think all contractors must have a "license" that they test for. Not so.Here in New Hampshire its the wild west. I guess it made us easier to get started and you'd think the market would filter out the idiots, but usually only after they cost the community tons of money in bad construction and broke citizens.
all in one policy?
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it doesnt matter how much it cost, you going pass it on to the customer.. 2+3=7
That is true. Roughly 2% of gross
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Well, they called "one package". I dont know if in insurance speak if those terms interchange or not. I do know that I only get one bill (well, one per month anyways).
I sound like an idiot when discussing insurance. I dont know if the agent talks too fast or what, but it just doesnt sink in.
You aren't going to get it for much less than a grand - to make it worth their while, but those are low limits on the coverage, IMO. You don't say what the deductable is, did you? That can make a diff in cost. I'd go for higher coverage and high deducable, as much as you can afford to lose on one claim. I work on houses that are a minimum value over a million bucks so I carry something like three million with a high deductable- a grand or two. Forget now 'cause I've never used it. but if I ever burn on edown, I want the top end covered. I can also depend on what sort of clientele you have - Suit-happy Californicators, or local good old boys and girls. Basicly I'm saying measure your risk to decide how much coverage. It is likely to only cost another hundred or so to up the high end to a million. Ask him.
State Farm doesn't even sell commercial coverage here. must be a state by state thing for them. They are a good company. I've been a state Farmer for twenty some years.
Liability is hard to get in some states and very expensive in others. for a first year or two, to establish a track record. Then shop price when you have a good record.
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Taunton University of Knowledge FHB Campus at Breaktime.
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Did some random yelow pages calling today...probably 6 or so. Two returned calls, one said they don't provide, the other was promising ...1 million liability, 2 mil max per year, 500 deductible, 10k tools - $750 annually. They even belong to Building Contractors Assn.
Gettin' better, I'll see if others call back before I jump.PJ
Everything will be okay in the end. If it's not okay, it's not the end.
That's more like it!
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!