Sent out an RFP for a project and got this response from one builder…
“Unfortunately in a recent meeting with our insurance agent we were informed that our underwriter will no longer offer general liability coverage on any residential projects. It’s not only for us they say it’s industry wide. They are not insuring residential projects anymore, period.
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We’ve checked other sources and are hearing the same thing everywhere. Apparently the insurance industry has been hit hard with law suits related to housing projects (mostly about mold, moisture, and EFIS stucco systems). We’ve argued with them that we’ve never had a claim and that we don’t build homes, only concrete structures, and we’re not involved with EFIS or plumbing, etc., and we do only individual custom homes rather than large tract housing – where the suits have generally originated. Unfortunately they are not persuaded. Homes are off their list, period. Consequently until something changes, they must be off our list too. It’s not worth the risk. Sorry.
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Any ideas? We’d love to hear them.”
So….what are others seeing? Is no one getting liability coverage on the houses they are building…or is it just a case of finding the right company?
Replies
See the WA state liscense thread for Jim B comments on the insurance.
Yeah, Cloud, it's tough these days.
Last fall, just about this time, I got notice from Farmer's Insurance, who had all our insurance for 20 years or so and our business insurance since 1991, that they were not going to renew our business policy when it came up in November.
We have never had a claim of any kind against our business insurance so I asked our long time agent about it and he said they sent out a notice the previous January that they were not renewing any contractors. Too little gain I suppose.
So we started shopping around and really had a hard time finding a company that would take us on. I finally happened onto an experienced agent who hooked me up with some underwriter in Ohio or something (I'm in Washington State). I sure hope I don't ever have to find out if they will drop me because of a claim, but I have the same coverage for about the same price as I did with Farmer's.
Scary stuff, man. I am required to have insurance to protect customers and the public, but I value it to protect my assets in case something does go wrong. Wouldn't take much to lose a million dollar settlement nowdays, and that would certainly wipe me out and put me in debt for everything I will ever earn the rest of my career.
A year or so ago I got a group e mail from an editor at FHB (the rest of the recipients in the group were contractors/contributers) asking about our experiences regarding liability insurance, that he had heard there was a trend for companies to back out of offering contractor liability insurance and wanted to write something up about it, but I don't think it's seen the light of day yet.
It's a serious concern.
With this trend, what are people supposed to do? How can anything ever get built? This is scary.
Well I'm hoping it is a supply and demand driven market, that there will be a fairly constant demand, and as companies decide to not offer that type coverage, other companies will see it as an opportunity and leap into the void.
But ultimately any increase in premiums gets passed on to the customer, which I guess means less disposable income to spend on other things. At about this point it gets over my ability to reason through. But I agree that it's worrisome, especially for folks just starting out, trying to make a go of it in business.
I live in Virginia and went with Erie. http://www.erie-insurance.com I do remodeling. 1 million dollar policy only cost me $550 a year. They serve other states as well.
I had a similar situation last May. My underwriter at the time, Zurich, was no longer writing policies for contractors. I went through the same ordeal about not touching EIFS or other trades for which I am not licensed and that I had never made a claim. Finally, I talked them into letting me stay but this year, instead of $1,200 / year in premiums the would require $10,000 / year. That, of course, would not do.
I searched all over creation to find something but was unsucessful. Then a builder friend of mine suggested that I join the local HBA and get insurance through them. Low and behold it worked. My HBA dues are $600 / year and my premium is $2200.
The 233% increase seemed like a deal compared to an 833% increase.
Yeah, charge me better than double of what I'm paying and I'll be darn happy to do it. Whats up with that.
Now if I could just convince somebody to write me a small business comp policy.