General Liability/builders Risk

c.c.co.

I have been thinking about not using insurance on our remodel and addition project anymore because we will probably pay about $60,000 this year in insurance for just a $1,000,000 g.l. and builders risk policy. These policies do not cover sub or emplyee injury anyway. I have not had any sort of insurance claim in 13 years and my buisness partner has not had a claim in 30 years. My thoughts were to invest the funds and make some money on them instead of throwing it away to the insurance company. After a few years of no premiums we would have enough cash to rebuild one of the type of houses we work on incase there was a fire. I guess I just need to consult an attorney which I'm sure he will advise against it. But risk = $. Any thoughts from you guys would be appreciated.

PS We are an LLC.

Gordo

Wow! $60k on $1m? Sounds steep. Try shopping.

BTW, the longer you go without a mistake/accident....the odds increase you will have one.

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Looks like some pros were here.

Bob Kovacs

So in a few years maybe you can save enough to rebuild a house in case of a fire. In that same time, could you save enough to afford to pay the lifelong medical expenses of a client's child who gets crippled because of your defective work?

Canceling that insurance doesn't seem so wise now, does it?

Bob

c.c.co.

The odds should be the exact same every time just like a slot machine, right. I would say I shop insurance about every two years on average an this is as good as it gets around here. 7% of all uninsured labor and 2% of total job cost is how they price it. My prices are comparable with other builders in this area. The insurance is not even easy to find.

c.c.co.

The insurance will only pay to a certain point anyway. It's not like the life long thing is going to pay $15,000,000. We are not McDonalds and the judge knows it. Very good points guys, thanks.

Gordo

Well, it sounds like a cost of doing business expense. You really shouldn't be paying for it........the customer should! Add the % cost to each job......fund that money into a special account that draws interest for that particular year...then pay the insurance as a lump sum.

Based on $60,000 a year...you can make maybe $3k a year in interest.

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Looks like some pros were here.

c.c.co.

Ya, the insurance is deffinately figured as a job cost to be added before markup. The insurance company always wants payments based off last years numbers with a self audit at year end.

dirt diggler

workers comp would be for covering subs/employee injuries ...

what is your GL based on??


what if there was a fire tomorrow??


Gordo's right anyways - this is overhead. Already included in your prices

I don't think it's wise ...

c.c.co.

Know one around here uses comp on residential. Once the customers see how comp raises job cost they agree to take the risk that the homeonwners insurance would cover any injuries since our won't.7% of all uninsured labor and 2% of total job cost is how they price it

Gordo

A classic example of why contractors get the short end of the stick. The HO doesn't want to pay the cost of WC so they brush it of to their insurance company.

Guess what happens when the insurance company starts scratching around with the uninsured contractor (because insurance companys do not want to assume blame)? Thats right.....contractor loses the pi$$ing match.

Do-do rolls down hill.

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Looks like some pros were here.

Stone Mountain

$60,000 in liability? Are they smoking something? Shop around!
Don't go without insurance. Soemthing can happen "just like that"

Here in Toronto, I'm paying about $20,000/yr for $2 mill liability, 6 cars and 5 trucks. All vehicles have complete coverage.

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Residential Deck Specialist: Vist our Website
www.fenceanddeck.ca

ultimatetouch

Thats why hes incorporated isnt it. That is unlikely to happen if hes a good contractor which it sounds like. I think I would self invest at the rate of 60,000.

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Ultimatetouch
Illinois Remodeling Company, Kitchen Remodeling Chicago, Room Additions Illinois

ultimatetouch

You pay 60,000 a year. How does builders risk protect you? You must be doing all large jobs I take it. What type of jobs do you do?

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Ultimatetouch
Illinois Remodeling Company, Kitchen Remodeling Chicago, Room Additions Illinois

c.c.co.

Mainly remodel and addtion projects ranging in the $50,000 to $250,000. All current projects have a original contract price of over $100,000.

dirt diggler

have you looked around ??? is this what other insurance companies are going at??

c.c.co.

Unfortunately yes

dirt diggler

is what it is i guess


like gordo said though - this should be included in the prices --- right???

Bob Kovacs

So your theory is "let's skip the insurance- if something goes wrong, we'll just close the LLC and file for bankruptcy". That's the moral route.....

And "good contractors" have accidents happen every day- that's why they're called "accidents". He's not a "good contractor"- he's a "lucky contractor" to date.

Besides, let a good lawyer find out that you used to carry insurance, and cancelled the policy because it got too expensive- the "corporate viel" would be pierced in a heartbeat and you'd be forking over your house, car, 401k, etc.

Bob

c.c.co.

Thanks for all the good post guys.
We already have all workers sign subcontracts stating their sole responsibility for taxes and injuries and such, something the attorney created. We also require the homeowner to carry insurance as they always do anyway due to mortgages. Maybe we should have the attorney add a clause stating the homeowners insurance will be responsible for there family and passer by. I know it always comes down to the court room. We both have seen injuries on the job just not ones serious ennough to go to court. The insurance will max at $1,000,000 anyway so in the instince of someone trying to sue for many millions you would be above that anyway. The sum of invested money over time will reach that $1mil mark and go long after. A total of 45 years combined buisness with no law suits is good odds. If we had this idea long ago I would not even be typing this. New corporations owned by other corporations are easy enough.

georgia dawg

Hypothetically, if you don't "pay the piper", you can try:

1. Don't own anything, put everything in your wife's, kids,dogs name.
2. If you own anything of value, put it separate LLC's.
3. Run your business as an LLC or Corp.
4. Take all earnings in a paycheck or Dividends, pull excess out into another LLC. Don't leave your company "fat for plucking", so to speak.
5. Have a lawyer for your Corp./LLC agent. Don't have yourself as your agent.
6. Retirement plans may/may not be safe havens. Anyone know?

Of course, run a safe shop with safe practices and do the right thing and pay for Julio's broken leg or nail-through-the-finger when it occurs. That's how they did it for hundreds of years before the politician lawyers and insurance agents got their grubby hands in your pocket.

best 'o luck.

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"How much per sq.ft? Well.. gimme $1K and I can build a shed. Gimme $1M and I can build the same size shed with gold plating and encrusted diamonds."