I just got my license and went shopping for general liability insurance. I found only one broker who had a program that would cover me and it’s price was so high I had to ask him two times to repeat the figure because I thought I had misheard him.
My business is small and I only self-perform about 25%; all residential, no new houses, just additions and remodels for now. Does anyone have advice? (besides kill all the lawyers?)
Replies
My business is small and I only self-perform about 25%;
So, it sounds like you are doing a lot of subbing?? Or employess??
Either of which raises your expo$ure.
Keep looking. You don't have to buy from a local agent. Try some of the National Organizations out there like NAHB etc.
Try you local Chamber of Commerce too.
Good luck. And don't forget that you need to include every cent of your premiums in your per hour labor.
It's Never Too Late To Become What You Might Have Been
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Find an independent insurance agency----not one that is a captive shop of State Farm or Nationwide Etc.
They can hook you up with Erie Insurance----they have treated me fair for 18 years or so----very reasonable----if your volume of work is reasonable.
Best wishes, Stephen
State Farm issued me a 300,000/1,000,000 policy for rougly $762/per year---adjusted yearly (every November) that can add $400-$800 more depending on gross receipts, and whether subs had insurance or not. (If they do, the auditor subtracts the amount from the gross receipts.) What do you consider too much?
Where are you located? Around here (central NJ) that sounds very inexpensive for a general contractor.
Southwestern Ohio. Let me go run and grab the policy. I don't believe I have Inland Marine for the tools (where you have to list each and every one). Before I sold my house, my agent had somehow tied my white tool truck (rolling tool shop) into my homeowner's policy. (That way, if someone stole the whole thing (please God NO, ***knock on wood****, I'd at least get back like $30,000, which seeing the truck is worth about $10,000, might start to cover all the tools...) Here's what my sheet says:
State Farm Fire and Casualty Company, Bloomington, Ill.
Comprehensive business liability
Bodily injury and damage:
$500,000 each occurrence
$1,000,000 general aggregate
$1,000,000 Products- completed operations aggregate
At one point I'd wanted to be an installer for Home Depot, so I had to make sure I met the insurance requirements. (Unfortunately, I couldn't be an installer because I have a drug possession felony from 1991 on my record....see what a handful of psychedelic mushrooms will get you. Can you believe there's no statute of limitations according to Home Depot!)
Is this enough insurance? How much coverage and what does it cost in NJ?
I don't really understand the insurance that I bought. Here's what my policy says:
1,000,000 each occurrence
5,000 medical payment
2,000,000 general aggregate (other than completed work)
2,000,000 aggregate (completed work)
50,000 fire
1,000,000 personal injury
For that (whatever it means), I pay $661.00 to cover me for interior painting only. I would have assumed that as a GC I would have to pay a lot more.
And to confuse things even more for me, I went to Allstate, but my policy came from Utica First (in Utica, NY), but the agent is listed as being in Buffalo, NY. I guess Allstate is just a middleman who takes a cut. I wouldn't even know who to contact if I had to file a claim.
-Don
Sounds to me like you've got twice the coverage I do. My policy is adjusted every year after an audit with State Farm. I don't know if you can get a rate adjusted depending on the type of work your doing or subing; Worker's comp rates are different depending on the type of work you're performing. Someone else on here wrote that his insurance company still nailed him for all subs regardless if they have insurance or not. (I'm not sure about that, but State Farm at least discounts when a sub presents proof of insurance.) $661 a year for painting doesn't seem bad to me, but do you really need THAT much insurance? How much damage does a painter do? Granted, you're probably working on mansions, but you might be OVER insured....
I'm working everyday in home worth close to and well over $1,000,000.
That doesn't include furnishings, electronics, or the three $80,000. cars in the garage.
Lets just say that somehow someone can "prove" that his negligence caused the entire house and contents to be destroyed in a fire while his clients where away in Europe?
Ya think he's got enough insurance?
What if he had TWO jobs going and the same thing happened to both?
A lot of what if's, but I would rather be covered, I'm sure you would as well.
Eric
It's Never Too Late To Become What You Might Have Been
[email protected]
I never thought of painting as full contact remodeling. Besides falling off a ladder on exterior paint job (which is covered by worker's comp.) what's the worst that can happen to a painter? To reach a million dollars in damages, you'd have to completely destroy that much property---even if he got paint on four lamborghini's, it'd still come off. The most I can think is a painter accidentally burning the house down after lighting a cigarette (and if you don't hire smokers, you won't have that problem either.)
Maybe he does have too much insurance....my Stepfather is an insurance consultant and looks over policies for school systems. Every week he finds the insurance company over insuring. Sure there's nothing wrong with being safe, but isn't it possible that some trades are OVER insured?
Too common painter induced fires.Oily rags and sparying exposive mixes (lacquer).Been more than one nearly finished expensive homes that have burned over the years.
Perhaps a painter does not have much exposure, or so you think.
Not arguing here, just trying to make a point.
Lets say he leaves fo rhte day and the house burns down to the ground.
Arson guys come in and determine it was the painters fault.
What next?
Even if it wasn'r his fault, what's he to do?It's Never Too Late To Become What You Might Have Been
[email protected]
Anything can happen. People play the lottery everyday, and someone wins, but what are the odds per individual? The same's true of insurance, that's why people buy it. I personally don't think $661/yr. is expensive, I was only wondering why painting required a $2 million dollar policy. I work in nice areas of town, but most houses don't cost anything close to that. Maybe that's the point, each person must determine what's right for himself. If this guy doesn't know what his policy covers, maybe he's been shystered by his agent. Maybe he shouldn't be paying that much for painting, or maybe he should. I don't know how expensive the neighborhood he works in is. My only point is, if he's only running one or two jobs at once, in $200,000 homes, maybe he's over insured.....geez, you can't say anything without getting jumped on in here....
Thanks for your thoughts. Maybe I am over-insured. Maybe I got mislead by the agent I saw. She didn't really seem to know a lot about GL insurance, but was just filling out forms which, as I later found out, were just passed along to the "real" insurance company.
I'll finish out the year with this policy, but I'll look into other options when I renew. Mostly, I'll be looking for an agent who can explain GL insurance to me.
No, I don't understand what my policy covers. They sent me like 100 pages of endorsements, disclosures, exceptions, exclusions, etc. mostly written in legalize. You would think that $661 would at least get me a description of what I purchased.
But don't let me stop you. I was enjoying (and learning from) the repartee between you and EricPaulson.
-Don
DonCando,
I'm small potatoes compared to the most of the posters on this site. I've been in business for five years, and work through word of mouth only. I don't know what your yearly volume is, but mine's around $150,000/yr. It's just me, a co-op trade school student, and my best friend Mike. I love remodeling/construction---I like to work with my hands. I suppose I'm not a general contractor in that I don't sub everything out and co-ordinate there arrivals, and tack on a percentage for myself. (Though that's not a bad idea, it's just not what I like to do.) I do sub out the work I don't like to do (roofing, concrete work), or am not efficient at (huge drywall projects, or have to (changing out electrical services). Not that there's anything wrong with subbing it all out----I've just found it difficult to find good subs who'll show up on your schedule instead of theirs.
I only wanted to mention that you find out what you're being insure for. Insurance agents work on commission, so obviously they'll sell you as much as possible.
I recently had the revelation that I was getting waxed on my health insurance. I'm relatively healthy, and my policy for myself and employee (the co-op is covered by his parents for health) was close to $450/mo! I know to most of the guys on here, that's chickenfeed, but for me, that's a lot. I checked the coverage and raised our deductible. (Yes, I know if something happens I'll pay more, but I betting that I'll save that amount or more in the long run.)
I'm not sure why E.P. was on me---I think most of the regular guys on here want to cover all the bases, which isn't a bad idea; I just wanted to make sure you looked into your policy. I know nothing about your area and after reading the posting after one of mine, it appears NJ is ungodly expensive...
I agree Coop, shop your insurance.
We fired our long time health insurer last year. Took the wc and gl from him too. He still has our auto and home.
blue
The subcontracting % is what's killing you.
I recently looked into GL insurance here in NJ. Based on $500k volume, if all work was performed by me or employees, the cost was under $1,000. If I subbed up to 15-20%, it was still under $2,000. If the subcontracted percentage went above 20%, the rate jumped to over $22,000.
The theory is that if you're subbing too much, you can have too many jobs going at once, which reduces your supervision (leading to the potential for more claims). They don't care in the subs are insured- the claim still falls to the GC first, so they end up having to pay out and then chase the subs' insurance policies.
Bob
In NY, someone wanting to move into GC category from having been a sub, would be looking at annual premiums in the $30K to $35K range, for projected sales volumes of between $1 and $3 million annually.
You must make sure that your insurance includes contractual liability, to be a GC.
In NY, the "scaffolding law" and the plaintiff's lawyers have made it just about impossible to enter into GC territory at anything other than the very high end. To want to start out building "affordable" homes, they would quickly become unaffordable because of the overhead burden one would need to apply.