Average Insurance Rates

frisco84

I've been doing my research into making my roofing business legitimate. I have discovered some interesting things. As of right now I am calculating to see how much I would need to just legalize it. I just can't figure out an average downpayment for general liability insurance for home improvement contractors. Can anybody just give me a more or less idea of what it is plaese.

apkole

Since rates are different for each state or region of the country, your best bet would be to shop a few agencies in your area to get pricing. My downstroke for the liability for our residential roofing business was around $800. Our rate was based on estimated payroll plus a fixed owner compensation of $19,600 (doesn't matter the actual owner comp, that is the number that is used). We have 2-3 seasonal employees.

Workmens comp ins is the number that will be the biggie.

Also, if you are going legit, you really want to be honest with the ins. carrier about what you do. Don't call yourself a home improvement contractor if what you really do is roofing. Should an incident happen resulting in an ins. claim, a falsified application statement could be grounds for denying the claim. All of those paid ins premiums would be for nothing.

dougger222

My liability insurance is cheap compared to all other "roofers" I know. $3,200 buys me one year of general roofing liability insurance with a 2 million cap.

Ed the Roofer

Upon just completing my audit for last year, we under paid by just under $ 8,000.00, so that is due immediately.

This also allows them to make the assumption that this coming years payroll will be equal, so my payment now will have to include the additional $ 8,000.00 for this year as well.

It sounds expensive, but just for one injury 3-4 years ago for one man, the covered costs were just under $ 500,000.00.

If I look at the big picture, financially, I am way ahead. Look for ways to stay safe and always keep your employees safe.

Ed

tekwrytr

That is great advice. Many contractors have discovered that a liability policy as carpenter or drywaller is far less expensive than an equivalent one as a roofer--and the Certificate of Insurance does not visibly declare that it excludes roofing. So contractors have been dutifully providing CIs to prospective clients for years that state a huge liability policy ($500,00-1,000,000), when in reality their policy specifically excludes roofing.

You have to watch for this. It gives the other contractor an unfair advantage (MUCH lower rates for liability policies), but can be leveraged by advising clients to specifically require confirmation that their projects are covered, rather than the generic CI that states, "Yes, they have a policy."

On Workmen's Comp, that is based on payroll, not volume. Rates are per $100 of payroll. Again, those same "other" contractors have found ways around the provisions. Most used is "reimbursement for outside salesman's expenses," a euphemism for paying the help in cash.

The second most used is requiring employees to sign on as 1099s. They may have to get a business license, register a fictitious business name, or other strategy, the bottom line being they are represented as subcontractors, rather than employees. In most cases, roofers (at least steep roofers) easily pass the IRS test for employees vs contractors, and the ones who don't can be presented as subcontractors.

If you think that is a situation unique to "fly-by-night" contractors, think again. Companies like Microsoft have employed "subcontractors" as developers for years, and the latest trend is to require incorporation as a requisite of employment. Sounds hokey, but it is prevalent.
tekwrytr

Ed the Roofer

tekwrytr,

Those are all good points and MUST be a part of every legitimate contractors presentation package to differentiate between the fly-by's and the true professionally organized law abiding contractors.

Ed

frisco84

I appreciate everyones feedback. These are all good things for me to consider.

I know this is a bit off topic but in NJ there isn't a Roofing License. Theres the home improvement contractors license, so wouldn't that cover my roofing. it wouldn't be me trying to be shady, its just thats what there is. At least from what I've learned so far.

Forry

I think the issue mentioned is insurance, not licensing. My contractors license allows me to perform ANY aspect of residential or commercial construction. My insurance however has tons of limits, including roofing. I'm only insured for roofing if the roof work is "incidental" to the majority of the work we'll be performing. What that means to me is that I need to call my agent prior to any gray area work. A phone call describing the job and a thumbs up from my agent makes sure I'm covered. If I read my entire policy from end to end, I might finish reading about the time my policy renewed, and have to start all over again. I just ask.

Grumpy

Ahh insurance. if you do it right, you can expect to pay about 37% of your payroll to your workers comp carrier. You can usually exempt yourself and any other owner of the company on the premise that you won't be suing yourself. Most guys cheat and get carpenters, or even painters, insurance however I don't advise that because if youg et caught you risk being fined back charges to make up the difference with interest plus jail time for insurance fraud. Even worse if someone gets hurt you won't be covered so why pay anything at all?

Do it right or don't do it.

Forry

We're talking two different kinds of insurance... workers comp. and general liability insurance. This guy might not know anything about either one.

Grumpy

Workers Comp protects yoru workes should they ever get injured and for roofers is damned expensive! 37% of pay roll meaning if you pay one man $100, you will be paying the insurance company $37 for that man.

General Liability is a completely seperate policy which covers a completely seperate list of occurences. Typically "damage to customer's property" is the biggest and most impotant coverage of general liability. I find that these vary greatly. Some are based on pay roll, some are based on annual revenue.

tekwrytr

As someone who has worked on both sides of the fence, I can tell you that the overhead of a "legitimate" contractor is substantially more than that of a "fly-by-night" contractor. The more a legitimate contractor can do to make clients aware of the differences (and the consequences), the better for everyone.

The advantage gained by the fly-by-nighters is mainly price; they can underbid the legitimate contractors and still make a major profit. The legitimate contractor's potential profit is eaten by necessary overhead (unavoidable overhead like insurance, not the cost of Christmas parties for the secretarial pool), and may mean break-even at a bid price that gives the fly-by-nighter a windfall profit.

In Minnesota, work on residences is tightly regulated. That does little or nothing to prevent (literally) hundreds of unlicensed "contractors" from advertising their services on Craigslist and similar venues. Many of those "contractors" have albums of stunning job photos, routinely provide long lists of satisfied customers, AND work at prices that most legitimate contractors cannot equal.

To differentiate, and to justify the higher prices charged, legitimate contractors have to tell their clients why they cost more, and what the benefits are to the client for the additional cost. Higher insurance costs may not justify a major price difference, especially when the fly-by-nighter provides a laundry list of satisfied customers going back three or four years.
tekwrytr

tnt specialty

WC is a set rate, based on payroll...it's absolutely calcuable...

However, some regions are prone to the "sub-game"...calling your employees subcontractors to avoid paying WC, (as well as the other appropriate labor burdens). If your "legit" in an area that practices this...it's time to find another biz. You won't be competitive.

GL can be all over the board;

Grumpy

Why won't you be working for any legit GC's?

I mean my certificate doesn't state my exclusions (other than fire limitation of GL). It simply only states my coverage ammounts. It doesn't even state my classifications. I can take my certificate, legitimate or not, and work for anyone who wants to see a certificate... and so can anyone else.

I'm an advocate that at least your classification(s) be posted on your certificates.

Michaeljp86

I cant get insurance for roofing, the ins guy said its about impossible to find and if you do find some its extremely expensive.

Grumpy

It doesn't matter what it costs... If everyone were doing it right the cost would be passed on and the playing field would be even. It costs almost double what carpentry costs.

It's true many companies won't insure roofers, but I think you need a new insurance agent.

dougger222

A couple years ago my Uncle's insurance company called his builders and asked, "What does Mr. *** do for you?" "Oh, he does all your roofing, ah?" CANCELLED...

I've known people who have flown under the radar doing only roofing with carpenters insurance for years. Luckily they've yet to run into a claim.

Michaeljp86

From what I gatherd with my ins I can do roofing but they wont cover anything if something does happen.

tnt specialty

Here's a good one for ya....

10 or so years ago we had a GL policy that did not cover us while working; Only "completed operations".

The only reason it came up, was that we happened to have a claim...the claim ended up bogus...However, in the turmoil, it was discovered we were not covered while the project was underway. Needless to say, I was absolutely livid with our insurance agent.

Grumpy

Roogin insurance just went up to 40%