Smart and wealthy building contractors are the ones who
associate with winners in their specialties, for good
reason. They've come to realize they will never live long
enough to learn all they need to know by themselves. They
see the value of sharing information and comparing notes.
They skip long, expensive learning curves suffered by the
do-it-yourselfer's. As a result, they get smart much
faster, and avoid making costly mistakes that happen using
only trial and error.
For example, consider commercial liability insurance for
general contractors. When buying insurance, contractors
are typically isolated, and the insurance industry likes it
that way. It is nice and complicated, and there are plenty
of ways to spread fear, to keep contractors from doing much
about it.
Your job as the insurance buyer is to stop asking
questions, and pay the premiums. Isolated contractors try
to ask intelligent questions, but they have no benchmark
idea of what the best deals look like. They have very
limited power.
I happen to know that rates are all over the map for
contractors liability insurance. General contractors
focused on residential remodeling are a good example. I've
seen premium rates range from 0.7% of sales to over 3%. As
I collect more and more examples, I finally start to see
into the murky marketplace. Turn on the lights, and it is
easy to see what to demand.
Contractors are reluctant to show their insurance policies
to their peers, because they are also competitors. Their
don't want to show their numbers for sales and payroll for
one thing. Also, they are not all that confident they have
the best deals, and don't want to feel dumb. Every time
I've seen contractors pull out their policies and compare
them, there are always a good percentage wondering how the
best deal on the table came to be that way. 80% of them
discover they've been overpaying large sums of money.
To get maximum value from comparing notes, you want to do
it with others who have very similar operations to yours.
Compare with others in your state, with similar license
categories, similar sales volume, doing very similar types
of work. That will eliminate most of the variables that
make it hard to understand what is going on with pricing.
Significant claim history can influence rates. If one of
your group is paying a lot more, ask about claim history,
to see if that explains it.
You've got to keep an eye on coverage variation also.Really
cheap policies might be claims-made forms instead of
occurrence forms. You can't compare the two. They are
completely different animals. Coverage limits and
deductibles also vary, as do exclusions. With all that
said, I've seen insurance companies quote identical
accounts with one quote being double the other.
The more contractors work together, the more power they
have when it comes to purchasing insurance. If a hundred
contractors doing an average of one million in sales
organized themselves into a buying group, they could
probably buy an insurance company. Working together, they
could expect to see insurance costs 20% to 30% lower than
those dealing with the industry one on one.
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Opt in at my website to get smarter about controlling
business insurance costs. You don't have to go it alone.
http://www.contractorinsurancetoohigh.com
http://www.icrs.biz
Don Bury, President
Insurance Cost Reduction Services
3663 Camino Bella Rosa
Sierra Vista, AZ 85650
Phone/Fax: 800-760-1867
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