New Construction Liability Insurance Cost - Business - Contractor Talk
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New Construction Liability Insurance Cost

 
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Old 05-23-2019, 02:47 PM   #1
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New Construction Liability Insurance Cost


I am building one duplex at a cost to me of $300,000 on land I own to use as a rental. I will be keeping the building and not selling it. This is my first project so I brought on a consultant to help me. If it works out I will build a few more.

I am subcontracting 95% of the work. The remaining 5% I am doing myself. The subcontractors all have insurance and liability waivers.

Considering I have no customers, what should I be paying for general liability insurance as the owner builder?

I got one quote for $3700, which only covers $300,000 of spend. If my costs go up, I have to tell them so they can increase my premium.
It is for:
$1,000,000 - General Liability per Occurrence
$2,000,000 - General Liability Annual Aggregate

Last edited by trescom; 05-23-2019 at 02:51 PM.
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Old 05-23-2019, 02:49 PM   #2
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Re: New Construction Liability Insurance Cost


A new Builder probably 1.5% to 1%. Mine is about 7 0% of my general sales minus some materials Etc. So if you do a million dollars in sales you would expect to spend seven to ten thousand. If you do 5 million dollars and sales you would probably expect to spend 35 to 45 thousand

So for 300k 3700 is appropriate here

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Old 05-23-2019, 03:03 PM   #3
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Re: New Construction Liability Insurance Cost


At first I thought if the customer is myself, the liability risk would be reduced (thus reducing the insurance cost) versus if I was doing the work for someone else or selling the building. Maybe this is not true.

Can anyone share some experiences when they used their liability insurance and the customer wasn't involved in the dispute?
If the customer is usually involved, I am considering self-insuring for the liability and only buying legal expenses insurance if the city allows it.

Last edited by trescom; 05-23-2019 at 03:43 PM.
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Old 05-23-2019, 07:30 PM   #4
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Re: New Construction Liability Insurance Cost


with today's society having the propensity to jump into litigation for any number of real or perceived reasons and there being an over abundance of ambulance chasers just drooling to file suit against someone...

IMO, insurance is not a place to skimp, cheat on or think one can do with out it.

a client does not necessarily have to be the one filing a claim or suit.

lookey loos, homeless, drunks etc can all wander on to a job site and become injured.
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Old 05-23-2019, 07:31 PM   #5
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Re: New Construction Liability Insurance Cost


Sounds about right.

They don’t make policies for owner/builders so you either pay for the commercial policy or build at your own risk. Unless you’re borrowing money, then you have to do whatever the bank says.
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Old 05-23-2019, 07:37 PM   #6
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Re: New Construction Liability Insurance Cost


factors that effect cost of a policy:

your track record

length of time you have had insurance

your credit worthiness

type of job & location

dollar limits on claims

time duration of project
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Old 05-23-2019, 07:45 PM   #7
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Re: New Construction Liability Insurance Cost


don't forget the bond...
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Old 05-23-2019, 07:46 PM   #8
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Re: New Construction Liability Insurance Cost


You should also buy Builder's risk, your general liability will not cover a fire, thefts many other things. Lightning strike excetera

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Old 05-23-2019, 07:49 PM   #9
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Re: New Construction Liability Insurance Cost


Quote:
Originally Posted by trescom View Post
I am building one duplex
Considering I have no customers
So, not a GC then. Interesting.
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Old 05-23-2019, 08:05 PM   #10
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Re: New Construction Liability Insurance Cost


Quote:
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So, not a GC then. Interesting.
Why?
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Old 05-23-2019, 08:11 PM   #11
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Re: New Construction Liability Insurance Cost


Quote:
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Why?
Probably shouldn't be here, he's not a contractor

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Old 05-23-2019, 08:13 PM   #12
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Re: New Construction Liability Insurance Cost


Quote:
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Probably shouldn't be here, he's not a contractor

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He might have just become one....
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Old 05-23-2019, 10:53 PM   #13
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Re: New Construction Liability Insurance Cost


No GC license required in Texas, but I did fill out a form with the city to become a "contractor" so I can pull the permit. I think that qualifies me for this forum.
In the past few weeks I formed an LLC, got an EIN number and opened a bank account. My plans are ready to go, just waiting on zoning change to go through.
I am in a unique situation being that I am building out 50 acres on my own property so my only contract is with myself.

griz, the one insurance broker that gave me the $3700 quote told me none of the following factors mattered and wouldn't affect my quote at all. I asked him directly how each would affect the premium and his answers surprised me because they seemed to contradict logic.
1. my track record
2. my credit worthiness
3. type of job & location
4. time duration of project (said I would be paying based the cost of project no matter how quickly I finished it)

The length of time I had insurance and dollar limits on claims were not discussed.

I am waiting on a quote for a builder's risk policy and another quote for liability.

Last edited by trescom; 05-23-2019 at 10:56 PM.
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Old 05-24-2019, 03:22 AM   #14
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Re: New Construction Liability Insurance Cost


Quote:
Originally Posted by trescom View Post
No GC license required in Texas, but I did fill out a form with the city to become a "contractor" so I can pull the permit. I think that qualifies me for this forum.
...
noop.
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Old 05-24-2019, 05:54 AM   #15
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Re: New Construction Liability Insurance Cost


This website is for people who make their living doing this stuff. Not for diyers. There’s a site for that. It’s expected if you come here for free information you’ll have some personal experiences to share with others. Telling us how expensive insurance is is nothing we don’t already know.
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Old 05-24-2019, 08:51 AM   #16
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Re: New Construction Liability Insurance Cost


One of the biggest things you are over-looking is the fact that you sub out 95% of the work.

My insurance, when I'm forced to get it, is substantially less than that, but I'm mostly remodel, with about 95% done in house.

New construction = higher cost.

High percentage of subs = higher cost.

You pay to play, one way or the other.
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Old 05-24-2019, 08:52 AM   #17
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Re: New Construction Liability Insurance Cost


Quote:
Originally Posted by SmallTownGuy View Post
noop.
Quote:
Originally Posted by Big Johnson View Post
This website is for people who make their living doing this stuff. Not for diyers. Thereís a site for that. Itís expected if you come here for free information youíll have some personal experiences to share with others. Telling us how expensive insurance is is nothing we donít already know.

You boys do realize that there are 2 Mods on this thread?

I'm pretty sure if they didn't want him here, they wouldn't be shy about booting him.
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Old 05-24-2019, 09:06 AM   #18
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Re: New Construction Liability Insurance Cost


Quote:
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You boys do realize that there are 2 Mods on this thread?

I'm pretty sure if they didn't want him here, they wouldn't be shy about booting him.
Good boy.

I realize that. Thanks for your concern. One mod already responded to that fact.

If you feel the need to report this thread, contact one of them. I don't feel the need.
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Old 05-24-2019, 11:11 AM   #19
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Re: New Construction Liability Insurance Cost


Quote:
Originally Posted by SmallTownGuy View Post

If you feel the need to report this thread, contact one of them.
I'm good.

Just messing with you, bro.
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Old 05-24-2019, 11:25 AM   #20
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Re: New Construction Liability Insurance Cost


Quote:
Originally Posted by Seven-Delta-FortyOne View Post
One of the biggest things you are over-looking is the fact that you sub out 95% of the work.

My insurance, when I'm forced to get it, is substantially less than that, but I'm mostly remodel, with about 95% done in house.
Thank you, this is very helpful. In what situations do you decide to skip insurance?

And to answer others' concerns, I am not turning down any offer to build for others if the numbers work (the numbers would need to be excellent). If you had an opportunity to buy land cheap, build out tract homes and take all the profit for yourself you wouldn't take it?

My philosophy is the more parts of the business I take on, the more money I make and the fewer customers I have to deal with. Just this duplex should appraise for twice what it cost me. The way I keep numbers attractive since it's my own (company's) checkbook is by not overspending, including on insurance. I am way overpaying on the sub labor, which also increases my insurance premium. If their numbers don't get better on the next set of buildings, I will start hiring employees since there are potentially 200+ to be built on this site.

Bottom line is I am properly registered with the government as a contractor and am performing or planning to perform construction work for profit.

Update: My one quote for builder's risk insurance came in about $1100.

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