New Construction Liability Insurance Cost

TxElectrician · May 24, 2019

Where in Texas?

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trescom · May 24, 2019

TxElectrician said:
Where in Texas?

Austin MSA

Seven-Delta-FortyOne · May 24, 2019

trescom said:
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.

I hate insurance companies, right up there with politicians and attorneys,

so I don't get insurance unless I have a client who requires it, or an agency that requires it. City and county make me get it before they will issue an encroachment permit. Some clients have wanted it, so I didn't care, it all went into the bid. :thumbsup:

But I also do smaller remodels, so it's not quite the same deal. I'm sure if I ever needed to make a claim on it, the insurance company would try to phuk me, so I don't even bother. :blink:

If I was doing what you're doing, I'd certainly get it.

Big Johnson · May 24, 2019

Seven-Delta-FortyOne said:
You boys do realize that there are 2 Mods on this thread? :whistling

I'm pretty sure if they didn't want him here, they wouldn't be shy about booting him. :thumbsup: :laughing:

I don’t care if he’s here, he thinks this website is for diyers, I’m just correcting him on his error. Mods here are a little funny, if you say something bad about cops or something else they like they shut it down. If it looks like regulars are having a little fun with newcomer diyers, they shut it down. I say leave it all up.

Big Johnson · May 24, 2019

trescom said:
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.

My bad, I misinterpreted what you were doing. Looks like you’re on track for easy money. Go get it. Doesn’t sound like you really need insurance.

trescom · May 25, 2019

Big Johnson said:
My bad, I misinterpreted what you were doing. Looks like you’re on track for easy money. Go get it. Doesn’t sound like you really need insurance.

Everything in life is calculated risk. Do you buy insurance for your healthcare (probably yes), your electric toothbrush (probably not).

The insurance companies have a "loss ratio" which is the claims paid out versus the premiums collected. Homeowners insurance loss ratios are often over 100% and are money losers. Auto and business liability is usually somewhere in the 50%-60% range and are big profit makers.

A few years ago I switched auto insurance and saved 30% on my premium. I am not anti-insurance, but I am against spending more money for the same or lesser coverage when I can save hundreds or thousands with a couple hours work. The lower the loss ratio, the greater potential of a big savings on insurance rates shopping around.

I could not find information online for loss ratios on new construction or the breakdown of homeless guy wandering onto jobsite type claims versus customer defect claims.

I am grateful for the input provided by a few people on general liability rates. Hope we hear from more guys doing new construction.

Irishslave · May 25, 2019

trescom said:
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.

Huh? I pay for it annually. There is no "skipping". Just bringing my drill on your property creates a liabilty for me and puts me and my assets at risk..........no "skipping"

BuilderJohn · May 25, 2019

Just because you don’t have a buyer for the house doesn’t mean you don’t have liabilities that might be worth insuring against.

What if one of the workers get hurt. Maybe their insurance pays and that’s the end of it. Maybe someones lawyer says you as owner and GC failed to provide/ensure a safe site and wants some of the “easy” money you’re gonna make for their client.

What if someone from the public who shouldnt even be there gets hurt on your property.

What if you build the whole house, paid for labor and materials then there’s a fire.

Or someone trips/falls at an open house.

If you ask the agent for examples of what your policy covers/excludes they’ll be better able to give more examples and you’ll be able to make a decision how much liability you want to assume and what you can afford.

And I’d recommend you get certificates of insurance from all the subs, not just ask if they have it. Sometimes “fully insured” means they have auto insurance and that’s all.

Big Johnson · May 25, 2019

trescom said:
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.

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

Where do I begin?

$150,000 profit for sitting back writing Checks for a few months and you’re complaining about a couple G’s for insurance and that your subs are being overpaid.

My advice is with all your profit you can self fund any liabilities and if you’re overpaying subs you should either do the work yourself or find cheaper subs.

No customers no money.

trescom · May 25, 2019

Big Johnson said:
Where do I begin?

$150,000 profit for sitting back writing Checks for a few months and you’re complaining about a couple G’s for insurance and that your subs are being overpaid.

My advice is with all your profit you can self fund any liabilities and if you’re overpaying subs you should either do the work yourself or find cheaper subs.

No customers no money.

I am not against insurance. I value engineered my $400,000 build down to $300,000 by moving a wall here, changing a material there, finding a better supplier for this, etc. If I can value engineer my insurance by getting better coverage for less I am all for it.

I think my $1100 quote for builder's risk insurance is cheap. I was expecting 3x more, but it shows why it is important to shop insurance.

In this area finding cheaper subs this time of year is not easy if they have not worked for you before or it is only one building. Some of our best bids were from subs literally flying in from across the state. The consultant I hired who has been in the trades for 30 years told me the labor rates I am getting for most trades are high for what I am building, but should come down on the subsequent builds. When I crunched the manhours for each trade he is right.

I am taking on huge risk by putting up hundreds of thousands upfront for land and soft costs and and doing a thousand hours of preparation work for no pay. For 2 years I have been investing time and money into this project and my projections are only that. I will be on site every day, so I wouldn't say just writing checks. Either I reap a huge reward or lose a ton of time and make no money.

Calidecks · May 25, 2019

My GL insurance covers 10k in faulty work as well. I believe I'm insured for up to 1 mil in sales or some **** like that. Never once had to show them my books or had more than a phone audit. 16 years not one claim. However my business is not new construction anymore.

Premium is around 2k.

Mike.
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Jaws · May 25, 2019

Calidecks said:
My GL insurance covers 10k in faulty work as well. I believe I'm insured for up to 1 mil in sales or some **** like that. Never once had to show them my books or had more than a phone audit. 16 years not one claim. However my business is not new construction anymore.

Premium is around 2k.

Mike.
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[emoji631] [emoji631]

Never had a claim, I get audited every year. Every Builder I know does here. If it's legit Insurance anyway. Lots of these guys around here Will buy paper policy

Mine is less than 1%. About 30k or a little more last year

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Calidecks · May 25, 2019

Jaws said:
Never had a claim, I get audited every year. Every Builder I know does here. If it's legit Insurance anyway. Lots of these guys around here Will buy paper policy

Mine is less than 1%. About 30k or a little more last year

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I don't know anyone that's a small builder paying anything close to that.

My broker only deals with contractors. He's a good guy. I talk with him all the time. It always ends up political in a good way. Lol!

In fact I worked for a commercial builder back in 2000 or so. We built store fronts when Albertsons bought out all the Lucky stores. There was a group of polo shirts walking the site with their secretary. A piece of plywood blew off the scaffolding and hit her in the head caused her to face-plant into the curb. ****ed her up pretty good. He about **** when his premium skyrocketed to 27k.

Mike.
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Jaws · May 25, 2019

Calidecks said:
I don't know anyone that's a small builder paying anything close to that.

My broker only deals with contractors. He's a good guy. I talk with him all the time. It always ends up political in a good way. Lol!

In fact I worked for a commercial builder back in 2000 or so. We built store fronts when Albertsons bought out all the Lucky stores. There was a group of polo shirts walking the site with their secretary. A piece of plywood blew off the scaffolding and hit her in the head caused her to face-plant into the curb. ****ed her up pretty good. He about **** when his premium skyrocketed to 27k.

Mike.
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[emoji631] [emoji631]

You can check it out, I'm not be Bssing. I bet Allen Edwards or any other builder in Texas with legitimate insurance that covers are paying .75% to 1.4% or so. Of all sales.

One good thing you guys got in California and Colorado excetera is that y'all are licensed and bonded. We don't have that here. Doesn't matter how good a builder you are, I've been in business only about 5 years less than you have I never had a claim. I still paid .75% or a little more, and that's with all Insurance Subs. If I have an uninsured sub they charge the hell out of me. That doesn't count workers comp for my crew either. Or commercial insurance for my buildings or trucks. I spend more than many people here make in a year and insurance. Not counting life insurance, health insurance home insurance in my wife's car. LOL. Or my camper or the house in Rockport. LOL

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Jaws · May 25, 2019

I bought Builders risk for a remodel today, half a million-dollar remodel, one of the worst classifications because of where it's at, $7,300. That's where the $5,000 deductible. That's on top of my GL

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Calidecks · May 25, 2019

I have commercial on my truck for 300k. It's only 1000 a year.

Mike.
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Jaws · May 25, 2019

Calidecks said:
I have commercial on my truck for 300k. It's only 1000 a year.

Mike.
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[emoji631] [emoji631]

Mine is a little more Insurance than that in about the same, but I have nine trucks. LOL

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Jaws · May 25, 2019

I do know big builders paying a fraction of what I pay. Maybe 35%. 30 million or more a year. No desire to go there.

Commercial is less if there is a bond. I only bond state projects

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Calidecks · May 25, 2019

Jaws said:
I do know big builders paying a fraction of what I pay. Maybe 35%. 30 million or more a year. No desire to go there.

Commercial is less if there is a bond. I only bond state projects

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We have to carry a bond and have to be duly licensed to get GL as a contractor.

Mike.
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Jaws · May 25, 2019

Calidecks said:
We have to carry a bond and have to be duly licensed to get GL as a contractor.

Mike.
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[emoji631] [emoji631]

They just check to make sure I was driving a four-wheel drive crew cab and had a cell phone. LOL

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New Construction Liability Insurance Cost

What should my general liability insurance cost?

$250-$500

$500-$1000

$1000-$2000

$2000-$3000

$3000-$4000

$4000+

TxElectrician

trescom

Seven-Delta-FortyOne

Big Johnson

Big Johnson

trescom

Irishslave

BuilderJohn

Big Johnson

trescom

Calidecks

Jaws

Calidecks

Jaws

Jaws

Calidecks

Jaws

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