# General liability/builders risk



## c.c.co. (Nov 13, 2006)

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.


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## Gordo (Feb 21, 2006)

c.c.co. said:


> 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.


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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## Bob Kovacs (May 4, 2005)

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


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## c.c.co. (Nov 13, 2006)

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.


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## c.c.co. (Nov 13, 2006)

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.


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## Gordo (Feb 21, 2006)

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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## c.c.co. (Nov 13, 2006)

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.


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## dirt diggler (May 14, 2006)

c.c.co. said:


> 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.


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 ...


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## c.c.co. (Nov 13, 2006)

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


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## Gordo (Feb 21, 2006)

c.c.co. said:


> 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


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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## Fence & Deck (Jan 23, 2006)

$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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## ultimatetouch (May 27, 2006)

Bob Kovacs said:


> 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


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 (May 27, 2006)

c.c.co. said:


> 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.


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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## c.c.co. (Nov 13, 2006)

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.


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## dirt diggler (May 14, 2006)

c.c.co. said:


> 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.


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


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## c.c.co. (Nov 13, 2006)

Unfortunately yes


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## dirt diggler (May 14, 2006)

c.c.co. said:


> Unfortunately yes



is what it is i guess


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


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## Bob Kovacs (May 4, 2005)

ultimatetouch said:


> 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.


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


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## c.c.co. (Nov 13, 2006)

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.


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## georgia dawg (Aug 12, 2005)

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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## tnt specialty (Apr 19, 2007)

A joke...Right?


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## woodman42 (Aug 1, 2007)

I carry liability because most of the time when you do commercial work it is required.
Even if I didn't have to I probably would, the risk is just to high when you consider what you have to lose.
I believe that insurance is one of the biggest waste of money you will ever spend..............until you need it.
Shop around for a more competitive rate. I pay 2065.00 per year for 2mil.


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## bujaly (Dec 16, 2006)

Really? One would consider not being insured? THAT IS EFFIN MADNESS I tell ya!!
LETS NOT FORGET ABOUT MURPHY'S LAW PEOPLE: WHAT CAN GO WRONG, WILL GO WRONG!!

In my experience, Murphy's Law is the one effin law you can't break!!!

Also C.C.CO, in MD _*you have to be insured*_ to receive licensing and to maintain it. It's the law. Do you need not to carry insurance in the lonestar state if your a residential contractor?

Plus, here's a little story for ya, I know a guy, PERFECTIONIST, had a bath remodel. He made *one* tiny mistake with a helper of his, in that he didn't go back and check the plumbing work the helper did. Job was done whenever, my friend gets a call. The family tells him something is wrong. He goes back to check it out..

WTF???? Water had traveled from one side of the house down a floor into the living room and coming out thru the ceiling RIGHT OVER THEIR GRAND PIANO!!! Their GRAND PIANO was ruined.. The helper hadn't done something right, and after the job was done, very shortly after, it started to leak. Guess when it started to do this?? YEP, while the family was on vacation..

He had to buy them a $24,000 grand piano, not out of pocket though, thru insurance.


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## tnt specialty (Apr 19, 2007)

bujaly; Texas has no contractor licensing......same here in Colorado....
So, yeah...no lic., no ins. no nothing required!


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## woodman42 (Aug 1, 2007)

tnt specialty said:


> bujaly; Texas has no contractor licensing......same here in Colorado....
> So, yeah...no lic., no ins. no nothing required!


 
True, Texas has no contractor license requirement, but to do any serious work over $10,000.00 you have to register with the Texas Residential Contruction Commision.
In College Station you can't get any kind of building permit if you are not registered with the TRCC.
I do wish we had license requirements, it would help us weed out the jack legs.
Makes it very hard to compete when you have every Tom, Dick and Harry with a pickup running around playing contractor and screwing up work, which does not help our industry. Not to mention under bidding everybody to the point you have to do twice as much work to get a decent profit.
Anyway I do carry insurance because the risk is to great, I don't want to lose everything that I have worked hard to build.:thumbsup:


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## c.c.co. (Nov 13, 2006)

What company do you go with woodman? Remember guys there is a difference between general liability and builders risk.


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## j_sims (Jul 5, 2007)

You are exactly right woodman...I've said this a hundred times before. And there are dozens upon dozens of "magnetic sign contractors" over in the Killeen/FT. Hood area...and now that work is sort of leveling off (for now) I figure that will bring out more of the jack legs like cock roaches. 

And sure as hell... there are still home owners that will bite at the lowest bid. In fact one low bid contractor just got sent down the river for 10 years bilking "customers" or should I say contributors for 20K.

Could I pass a contractors licensing exam right now? I dunno...never saw one. But I would be the first to say that If I couldn't, then I would need to go back to the drawing board.

To tell you the truth I really thought that(maybe) the contractor registration was just a prelude to contrator licensing...we'll see.


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