# General Liability



## tigerpilot1995 (May 28, 2009)

I am trying to learn the ins and out of the GL part of this business. I just had an insurance agent tell me that I will pay based on ALL the money I pay out. That includes x amount for materials. I understand that I will pay based on the 100s of dollars I pay out. He says that if I pay 10k for material and 10k for labor that I will pay 20k worth of GL premium. I don't get it. I understand paying on the labor but not the material. Is this guy correct?


----------



## KellyD&B (May 4, 2009)

That doesnt make sense. You get a policy for a certain amount of money. I have a $1M and I pay under $2,000 a year. Find a company that will do this.


----------



## ARI001 (Jun 16, 2009)

If you are just starting out you will have to estimate how much in total jobs you will do. Figure high or at the end of the year you will pay the difference. After the first year you will get an annual audit and your premium will be adjusted accordingly. Materials, labor, amount of work sub-contracted, type of work completed, years of owners experience, amount of time in business, financial strength, type and class of licensing, average job size, payroll amounts,and # of employees are all factors used in determining the cost of your general liability premium.

Make sure you use a company that has at least a B rating preferably one that is A rated.


----------



## Astrix (Feb 23, 2009)

Usually liability premiums are calculated by applying a rate against your total gross revenues: labour and materials. 

Base rates are determined by actuaries who use statistics from each specific trade and determine one blended rate after figuring out what the materials vs. labour split would be most of the time. For example, statistics might show that: Roofing is approx. 60% materials and 40% labor, but painting is approx. 30% materials and 70% labour. (I know I am off with these percentages, but they are just examples.) 

The actuaries include materials as part of their liability risk assessment because different materials pose different levels of risk. Even though one might argue that faulty material is not covered or that the manufacturer will be responsible and not the contractor, if something happens: (1) it is the contractor who initially gets sued and their insurance company has to investigate and defend them, and (2) sometimes it is not possible to go back against the manufacturer so the contractor who decided to use the faulty material is stuck with the claim because they ultimately made the decision to use that material and not another type of material. If the material is all owner-supplied then you are not responsible for that hazard and your total revenues that you report to your insurer will not include a $ amount for those materials.

Anyway, back to insurance rating: Maybe your particular business is outside of the average. Maybe you have a great hook-up for materials and you pay only half of what most of your competitors would pay; or maybe you only do high-end custom work so your labour costs are a higher % of your total revenue than most others. If you give more detail to your broker, they can use that to help negotiate a better rate. Even though actuaries come up with base rates, underwriters always deviate from those rates depending on claims, business experience, how much you sub-let, other factors, etc. (ARI001 already mentioned this.)

Alot of people don't want to spend too much time dealing with insurance and filling out applications and getting answers to their broker's questions. So most of the time insurance brokers/underwriters try to keep the rating process as simple as possible, ask the minimum amount of questions and just use the base rate times your gross revenues. If, however, they have the extra information and you have a good broker who will press the underwriters to do the extra math, then you can get a better rate.


----------



## ArmstrCarpentry (Jan 24, 2009)

MY GC policy (1 mil) is $500 a year in Maine - Residential only, no roofing. Not carrying comp (work by myself)


----------



## JonM (Nov 1, 2007)

Last year mine was 500...this year it dropped to 400 for 1 million

http://www.uticafirst.com/

The link in this link is my agent 

http://www.contractortalk.com/f16/another-insurance-co-42043/


----------



## CookeCarpentry (Feb 26, 2009)

Wow, you guys in the northeast are practically stealing GL. I am paying over $1k a year, and it's only myself, and one full time and one part time employee.

But I do know here in PA, our rate is based off of type of work, what they call "exposure" (or payroll), and sales (yes, sales, they do not care what the percentage break out is between labor and materials).


----------



## Mrmac204 (Dec 27, 2006)

I just got a new policy this afternoon. $925 covers 2 million. and a bunch of other stuff as well, (1k deductable) tool coverage, extra vehicle coverage etc. an all in one sorta thing 
even covers if I buy a bunch of material and take it to a job site, where it gets burned up. I never would have thought of that one.
its got like 44 catagories! I tried to read it, but honestly this thing coulld confuse a hornet.
the agent did explain it though 

Laurie

www.lauriescustomfinishing.ca


----------



## stew (Oct 1, 2009)

please clear something up for me . as i look through co requirments some require g/l and e/o insurance do i raelly need e/o for property preservation thanks


----------



## CharlesD (Feb 12, 2007)

stew said:


> please clear something up for me . as i look through co requirments some require g/l and e/o insurance do i raelly need e/o for property preservation thanks


I always thought errors and omissions insurance was for realtors, home inspectors, appraisers and the people like them. I think architects would also need it.
I had an agent try to sell it to me once but the only thing I ever had was gnereal liability and Workman's comp. Once I left the job finished, my insurance coverage for the job ended. I wasn't responsible for someone falling off the deck I built or drowning in the pool I built after I finished the job. My liability ended when the job was completed.
With E/O insurance you'd be covered for those things, I believe.


----------



## Red Adobe (Jul 26, 2008)

You'll also usualy pay a bit more the first year if you havent had ins before. The longer your with the same co the more it should come down if you have 0 claims. Mine started at 1200 and is now 450 yr


----------



## mencheman (Aug 18, 2009)

I am a GC in manhattan , could you tell me who you deal with


----------



## Framer53 (Feb 23, 2008)

mencheman said:


> I am a GC in manhattan , could you tell me who you deal with


 
Good luck!!
I mean it. NY is tough to get GL ins. If you were a one man band there is artisan ins available through Erie.:thumbsup:

Our state is tough because of the liability for people falling off ladders and scafolding. They are allowed to sue you, even if they are employees collecting comp. Out state is screwed up!!


----------



## DiamondFieldSvc (Nov 10, 2009)

tigerpilot1995 said:


> I am trying to learn the ins and out of the GL part of this business. I just had an insurance agent tell me that I will pay based on ALL the money I pay out. That includes x amount for materials. I understand that I will pay based on the 100s of dollars I pay out. He says that if I pay 10k for material and 10k for labor that I will pay 20k worth of GL premium. I don't get it. I understand paying on the labor but not the material. Is this guy correct?


Go to InsureTek dot com. They have great rates for the whole package with GL and E&O with Workman's Comp. Whoever told you that is a scammer.


----------



## Chris G (May 17, 2006)

$1k for $2mil in Toronto.


----------



## Willie T (Jan 29, 2009)

Come down to Florida. I was up to $10,000 in yearly premiums for awhile.


----------



## DiamondFieldSvc (Nov 10, 2009)

Willie T said:


> Come down to Florida. I was up to $10,000 in yearly premiums for awhile.


 I'm in Florida as well, InsureTek is not like that. They're really good about the insurance package. And it's the lowest I've seen around.:thumbup:


----------



## samccard (Aug 17, 2007)

I pay $4000.00 year. I need to move North.


----------



## DiamondFieldSvc (Nov 10, 2009)

samccard said:


> I pay $4000.00 year. I need to move North.


 Well, north is cheaper, but l only paid $1200 for the year with InsureTek in Florida


----------



## bdoles (Sep 11, 2007)

If you have a Farmers Bureau around you, give them a call they might be cheaper. It varies by area, but we just got a $1m policy for a little over $1k.


----------

