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Seven opportunities to cut your construction insurance costs

By Higginbotham on November 23 , 2015

construction insurance costs

The construction industry has been hit pretty hard in recent years. Material and building costs continue to go through the roof, labor costs are up, workers’ compensation and medical costs are up, and lawsuits are on the rise. So you’re constantly under pressure to find new ways to reduce costs, not only for the sake of immediate profits, but to remain a viable competitor in the marketplace.

It’s a constant balancing act, and it’s always good advice to focus on the fundamentals – risk management, loss control, and claims management. But many contractors take unnecessary gambles when it comes to insurance coverage, and they often end up overpaying.

Your construction insurance is likely one of your biggest costs, so take every opportunity to reduce it.

The decisions you make today about your construction insurance coverage can have huge and potentially costly consequences to your bottom line down the road. Follow these tips to cut your insurance costs while still getting the best protection:

  1. Pick the right insurance partner. You want a company that knows your industry, has the resources to give you the best coverage, and has to carriers with strong A.M. Best ratings.

  2. Don’t shop for price – shop for value. Many contractors instinctively shop for the lowest priced policy. But those “bargain” policies usually don’t provide enough coverage to meet job requirements. If you get a low cost GL policy that doesn’t cover much, what good is it? It also doesn’t make much sense to cut your GL limits from $1 million to $500,000 just to save $50 a year.

  3. Know your policy. Too many contractors don’t take the time to understand the nuances of their policies until they have a claim denied. Ask your insurance agent to explain what's covered and what isn't so you're not surprised if a claim occurs.

  4. Don’t buy unnecessarily. Don't buy insurance for coverage that's already included on one of your other policies. For instance, medical payments coverage may not be necessary since the majority of people driving company cars are employees and covered by workers’ compensation or group health insurance. Also, since most of your vehicles and equipment are likely insured on an actual cash value basis and they depreciate, review your equipment, property, and vehicle schedules regularly to make sure those assets aren’t over-insured.

  5. Properly transfer risk to your subcontractors with up-to-date insurance requirements, certificates of insurance, and additional insured endorsements to avoid unnecessary premium charges and help you qualify for additional rate credits.

  6. Beware of misclassifications. Make sure every employee is classified with the proper code to avoid underpaying or overpaying for workers’ compensation insurance coverage.

  7. Review your coverage often. Don’t just automatically renew your current policy. A change in operations can affect your rates, so review your coverage, loss runs and experience modifier after a significant change. Don’t just assume your coverage and rates are adequate.

If you want to remain a competitor in this market, you need to have a strong risk management strategy, one that includes smart decisions about your insurance coverage. To make sure you’re getting the best coverage at the best rates, talk to the construction insurance experts at Higginbotham Insurance.

 

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Tags: Business Insurance

  
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