Top 7 Strategies for Managing and Controlling Insurance Costs in the Construction Industry
By James Agee
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If you own or manage a business in the construction industry, it is likely that you are already aware of the fact that the cost of insurance is a major expense to your company. I am an insurance professional that specializes in writing policies for the construction industry. Here are my 7 tips to getting the best insurance rates for your construction company
- Shop around for the best price. Get several quotes from several different carriers. You'll often be surprised at the difference in price from the highest quote to the lowest quote. This is especially true of general liability, commercial auto and commercial property coverage.
- Shop around for the best agent. Construction insurance is a specialty area of insurance. Not all agents have the industry knowledge or the right carrier relationships to get the best policy for a construction related business. If you are searching for an agent, ask he or she for references from other construction clients that they work with. Don't be afraid to call those references. It may also be a good idea to test your agents knowledge by finding out how familiar he or she is with the some of the concepts outlined in tips 3-7 below. Lastly, if you already have an agent be sure to tell them that you expect them to shop for the best rate each and every year. Let them knwo that simply renewing the same policy every year is not good enough.
- Be proactive in minimizing claims. This means that you should take steps to avoid workplace injuries well before they ever happen. It is an absolute fact that the number of claims and the dollar amount of the claims that your business files is one of the largest factors that the insurance companies use when determining how much you pay for your policy. It is also a fact that businesses who implement a safety committee and practice other proactive safety related activities are statistically far less likely to file a claim than those companies which do not.
- Find out what discounts are available for your policy. There are many types of discounts that apply to different types of insurance polices. For example, many workers' compensation polices offer discounts for having a written safety program or for having a drug free workplace program in place. Some commercial auto polices offer discounts for establishing and documenting a regular maintenance routine for fleet vehcicles. There are many other discounts available for these and other types of policies. In many cases, you'll never know about them unless you ask.
- Use a workers' compensation policy with a dividend plan. Many workers' compensation polices offer a safety dividend in the form of a cash refund on your policy if you go the entire policy period with little or no claims. The return can be substantial. Some of the carriers I work with will give customers back more than 30% of the paid premiums if you go without a claim.
- Find out if you qualify for a contractors credit. Many states offer a credit back on workers' compensation polices to companies who can demonstrate that they pay their employees over a certain wage amount. The wage amount to qualify differs for each state and not all states offer the contractors credit. However, if you do qualify the credit can be for a significant amount. The maximum credit in most states is between 25-35%. You may also be pleased to know that the credit is very easy to apply for. The application is 1-2 pages in length and should not take long to complete if you keep good payroll records.
- Consider adding a deductible to a policy that would not typically have one. Workers' compensation insurance is a good example of a policy you can do this with. By adding a $500 deductible to the policy you can not only save directly on the premium, but your claims rating may improve because small claims are basically paid out of your pocket instead of the insurance companies
James Agee is the Vice President of Florida Roofers and Construction Insurance. The company is a specialty insurance agency with a focus on providing workers compensation for Florida contractors [http://www.floridaconstructioninsurance.com/11.html] as well as Florida employee leasing [http://www.floridaconstructioninsurance.com/12.html] solutions for the construction industry. Florida Roofers and Construction Insurance is also a great resource for information on construction industry insurance topics including free safety training courses, a sample written safety program and a construction industry blog. Online quotes are also available.
Article Submitted On: December 26, 2007