General Liability

CDR

How do you incorporate General Liability into overhead on a project.

Scenario:

$50.000.00 Job half material half labor.

What percent markup is customary for general liability in an estimate?

Do you line item on the proposal?
or
Do you prorate the cost into each item?

Warren

My general liability works out to about 1 to 1 1/2% per each job. My costs are probably 3/4 labor (which is higher on general liability) and 1/4 materials. I am sure that this will vary depending on other factors as well such as where you do business, type of work you are doing,etc. Your best bet would be to look at last years numbers. Take your total receipts and divide it by your insurance cost to get an idea.

DBBII

GL is one of those things that you HAVE to have even if you don't have any work (at least here in Florida you want to keep your license). So, it's not really a percentage -- it's a fixed monthly cost that's not really a percentage

Warren

In Ohio, General liability is factored against our total receipts and is audited yearly. This was the first year that I have ever gotten a check back. Every other year I had to pay them more based on the fact that my estimates were low. Might be different in FL.

Astrix

Despite how your insurance broker/agent might present the rating method to you, Warren is right in stating that "General liability is factored against total receipts and is audited yearly".

Sometimes, the underwriter will develop one blended rate for all operations and sometimes they will have separate rates (example: own work vs. sub-contracted work; or electrical vs. plumbing vs. HVAC). You pay a deposit premium at the beginning of the policy term and then at the end of the policy term, when your actual revenues for the past year are available, an audit adjustment is processed.

The only time that you would take a flat annual premium and then simply divide it into 12 months for a fixed charge would be for small business that is subject to the minimum premium.

CDR, if you don't know what your GL rates are, simply call your broker and ask them to help walk you through the insurance premium calculation for project cost allocation purposes. Brokers do this all the time.

Hope this helps.

DBBII

I probabily should have expanded my comment a little. My GL insurance has a minimum premium. If I do zero dollars in work, I still have to pay a certain amount. Once my volume gets above a certain amount, then there is a specific rate that kicks in