If you’re a contractor you don’t need me to tell you the business insurance climate has been brutal the past six to seven years. There was a time when every insurance company was a player and contractors were offered policies at bargain prices. But over the past several years, non-renewals, limited markets, and rising premiums have become the norm, prompting outrage and resentment from the entire contracting industry. The most significant reason for this stunning turnabout is the construction defect debacle. That issue is not going away anytime soon, so if you want to manage your property and casualty insurance costs, you are going to need to be much more proactive than in years past. Here are some strategies to help you gain control of your insurance.
1. Allow insurers to compete for your business – At a minimum, create competition for your business by putting it out for bid every two to three years. I understand that the process can be time-consuming and tedious; however, it is in your best interest. Insurance companies’ appetites for business change, policy coverages are modified, and rates can creep up. Competition naturally brings out the best in your agent and your company. They will understand that it is part of doing good business. After all, you have agents calling and asking for opportunities to quote, don’t you? Your agent does the same thing with his or her prospects – that’s how agents make their living. Your costs and your coverage are at stake. Make sure you have the best program.
2. Make sure your policies are correct – Sounds simple enough, but it’s not always the case. I can’t tell you how many times I have worked with business owners who don’t have the coverage they think they have. Really review your current policy and make sure it is accurate and covers your needs. If not, the proposals you get will be out of whack, too.
3. Don’t wait until the last minute to start the bidding process – I can’t emphasize enough the importance of this one. If you wait until two weeks before it’s time to renew your current policy, you will be overwhelmed with the process. To make matters worse, you probably will not get the best quote if you compress the time frame. Many companies have time requirements, and they may be the ones offering the best options. Give yourself at least 90 days to work the bidding process. This will enable you to receive all the quotes at least two weeks before your renewal date, allowing time for you to make an informed decision. When was the last time you received a quote that far ahead? Part of the reason you might not is that you began the process too late.
4. Make sure your risk management practices are in place – The best way to get a great insurance premium is the same way you get a great job. You have to put your best face forward. Make sure the insurance companies bidding on your coverage know that you screen drivers for moving violations and accidents before you hire them; that you require certificates of insurance from subcontractors naming you as an additional insured; that your place of business is neat and safe; and that you hold regular safety meetings with your employees. By the way, if you’re not doing these things yet, consider starting. Not only will they help you save on insurance premiums, but they will also keep down claims and all the headaches that come with them.
5. Review your coverages for value – Price is important, yes. But I challenge you to realize that value is even more important. Think about your own business. Do your clients get what they pay for? Do you pride yourself on being the cheapest on the street? Don’t think your insurance should be any different. Take a detailed look at the proposals, get help evaluating them if you need it, and make sure you can sleep peacefully at night knowing your life’s work is protected. Your insurance is the key to your survival in the event of a catastrophe. If you value your business, demand value from your insurance policy, too.
I hope these strategies prove useful for you. If you commit to them, your insurance experience will benefit and improve.