It’s always a frustrating time of year when your General Liability policy renews. The insurance carrier seemingly always wants more money every year. Your current agent offers very little help other than an apology and a story about how everyone is experiencing rising rates.
There are opportunities to be more proactive available:
1. Know how your company is billed for premiums
Knowing how your carrier calculates your premiums is paramount. Typically there are three methods carriers use: gross sales, subcontractor costs, and payroll costs. If the majority of your business is from sub-contractors and your premium is derived from gross sales, you could be paying way too much.
2. Shop it
There are several business models a roofing company can use to generate business. Whether you use W-2 employees or sub-contract 100% of your work, new construction or only re-roofing, each policy can be tailored to your company. A good agent will know how each policy is rated. Whether it’s rated by gross sales, subcontractor costs or payroll, they can recommend the most appropriate one for your roofing business.
3. Deductibles
Just like your personal auto insurance, the higher the deductible the more you can save on your premiums. Many roofers know they will be paying to replace the roof out of pocket and are only concerned about using their insurance for a catastrophic loss.
4. Estimate your revenue properly
Roofing insurance carriers never give a refund on their premiums. But they will charge you more after an audit if your actual revenue exceeds the estimate. So when you estimate your annual sales for insurance purposes you should be conservative, knowing that you’ll end up paying your fair share in the end but not more the necessary.
5. Buy in Bulk
Some carriers offer a tiered rating system when you initially set up the policy, meaning you will get a better rate if you anticipate more sales at the onset of the policy. It's a bit of a balancing act, knowing that you’ll end up paying your fair share in the end but not more the necessary.
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