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I have started a small home repair business (3 months) and I’m currently working on getting my builders license. The next thing I want to start looking into is insurance.
I’ve seen where company’s have on their trucks “insured” and I’ve seen some that say “bonded”. What’s the difference?
Also, I was wondering, Do you have to have your company legit before you can get insurance or bonded?
I want to legalize a company, but first I would like to have steady work. I don’t want any costs coming out of my bank account to cover any of my overhead. I’m definetly going to register my company , but not until I can see what kind of work and how steady it will be. In the mean time I would like to be licensed and insured (or bonded depending on which is which) until I can make this decision. Is this at all possible?
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it depends on your state ad jurisdiction...
most signs that say "insured" or "fully insured" are BS.. most contractors are NOT "fully insured"...
one way to differrentiate yourself with your prospective customers is to document your insurance in your proposal by offering "certificates of insurance"..
bonding is also by state and jurisdiction....
some require it.. some you can't get it..
sometimes laws are written requiring it even when it is not available...
contact your state for your licensing requirements.. you can usually get the info online
what state do you work in ?
*Pantango,Get the insurance as fast as possible. Not only are you jeopardizing your existing bank account, but you are jeopardizing everything you own, as well as your potential future earnings. If you work on someone's home, and something happens, insurance will cover you. If this insurance is not in place, they will sue you personally. When they sue you personally, all of your personal assets and possible future earnings will be put in jeopardy. Insurance is cheap. ESPECIALLY insurance for the type of work that you are doing. I pay about $500.00 per year for one million in coverage. I could buy less insurance, but most city regs here require at least 1 million in coverage for a business. Bonds can get weird. Here, there are three types available. The first protects the city in case you do not finish the job, or in case you screw up. This type of bond is called a "Municipal Bond", and protects the city from a lawsuit by the client for letting you do business in their city. Kinda stupid really, but required here. They cost $50 per year, per city that you do business in. The second is a bond that protects the client in case you steal something, break something, or don't finish the job. Don't remember the name of this one, and it isn't required. This is the bond that most clients think you have when you mention bonded in your ads. The third bond is required when bidding city or county jobs. It protects them in case you are unable to finish the job. The bond will pay them to get the job finished.There are several more bonds available, but none are required here so I don't keep up with them. Contact your local builder department, and they can give you a better heads up of what is required in YOUR area.James DuHamel
*I live in Michigan and I'm still researching the laws to see what is required. $500 a year don't sound bad for that much insurance. I have been reluctant to really start advertising until I get this stuff out of the way. I have doing things for friends and family so far, but I want to expand.
*"Liability Insurance" - As James says, get it NOW. I too have $1M in liability and at $538 anually for just myself. May increase it to $3M if not too much more. One caveat: Make sure the policy states what you do. For example, mine states carpentry, painting (int. & ext.), general repairs (that gen'l rprs. is important) minor drywall/texture and minor concrete/masonry, and that I don't do painting on building over 3 stories. If one if the trades/scenarios is not listed, and something happens while doing that one thing, you are not covered. Remember, by nature, insurance companies are created to "take in" income as in premiums, not pay it out, so they will look for any legal excuse possible to DENY pay a claim and do that routinely.
*In addition to General Liability, haven't you guys forgotten about Worker's Comp insurance? I max out my GL policy, the riders you can get to cover just about anything are cheap. I started out with $300,000 coverage, bumped up to $500,000, then $1,000,000. My premium is about $6,000. I like the completed product coverage.
*Allan is right. Do not treat yourself, or yours and your family's future like a 2nd rate citizen. CYA w/WC also.
*Look into something called an artisan policy since you seem to be doing the work yourself. You might be able to get coverage for a little less than that already mentioned. A lot of policies are partially based on the dollar volume of work you annually do----your volume will be minimal at first and so will your premiums.Be VERY sure you are covered properly if you are doing anything even resembling roofing,soffit or cornice work.This area is frequently specifically EXCLUDED from a lot of general policies. Even doing something as trivial as cleaning out gutters while climbing on a roof could void your coverage if the insurer is looking for a loophole.Liability policies and W.C. rates for roofing are so sizable that the $500 figure mentioned earlier made me snicker whimsically( Ahhh,if only life were so easy....)all that said,it is to cheap to do without. this is one areawhich quickly seperates the legitimate from the fly-by-nights.
*PantangoLike James said, the type of bond everyone thinks about is the kind that protects you from a 5 finger discount employee or the fumble footed, all muscle and no brain helper. Think of a bond as the same kind used for "getting out of jail" on bond. You are paying a fee to guarantee to your customer that if something comes up missing or broken, you will be liable. Normally this is covered under your general liability policy. the other kinds of bonds are for a specific job or contract and can be very expensive depending of the extent and cost of the jobRecommend a minimum of $1m general liability to start. Also get replacement coverage for all your tools, no matter where they are: at the office, in your truck, on the job site, in the job tool box, etc. For the little extra coverage, it is worth it.Worker's comp is also worth it. If you are incorporated and you hold more that a certain percentage of the "stock", you can opt out of having coverage on yourself. You only pay the rate when you actually pay an employee.In Oklahoma, I cannot duplicate my certifice of Worker's Comp. It prints out black. It takes less that 5 minutes to call the State office and have them mail a certificate of proof of insurance to the prospective customer. I also do the same for proof of general liability. If the customer is in the office, I will have an office worker, within hearing/listening distance of the customer make the calls. Most of the time, the proof arrives within 2 days. If I'm at their homeand it is after hours, I let them know that I will make the calls hte very next day, otherwise I make the call right in front of them.Cannot state it enough, get the insurance first !!!
*Pantango, get yourself set up in an LLC, or S corp.Then get insurance.Then, if you acquire other assets, use land trusts and llc's.Then, don't worry.blue
*...........read the fine print in the policy .....make sure you'recovered for the work that you are doing.
*Better yet, Jcallahan, have your attorney read the fine print.blue