One of the things every smart company must have is insurance, it’s simply the cost of doing business. Why do we need it? It’s simply to protect you by reducing the risk to a company if something goes wrong. Most contractors have general liability, worker’ compensation and some commercial auto insurance. When you purchase an insurance policy, the underwriter of the policy will have a range of questions that helps the underwriter understand how risky your organization will be to insure. The underwriter is the company that will guarantee payment in case of some damage or loss, they take on the financial risk for liability to your company.
The underwriter and the insurance broker (if you are using one) determine the cost of your insurance policy. You guessed it, the more risky your organization is, the more your policy will cost.
There are a number of reasons you may be paying too much, but two big areas are safety and type of work.
Having a great safety record pays dividends. It’s not just the safety meeting logs that OSHA wants to see, it’s the daily safety check your underwriter may want to see in an audit as well. If you have a daily safety check that your insurance company can audit, it could reduce your insurance costs. Sometimes it’s hard to keep up the required safety meetings, but it’s definitely worth it. You must have safety meetings and safety checks documented. If you use construction software, the software should provide a place to document safety meetings and daily safety checks. We think its important enough to include in our products.
The other big area for insurance, especially with subcontractors, is the type of work you do. Was that job commercial or residential? The difference could be thousands of $$$ dollars a year in the cost of your annual insurance policy. It costs more for residential construction contractors insurance than it does for commercial. Why? Because it’s riskier to the underwriter. If you can’t document the split in business between commercial and residential business you do, then you have to pay the higher residential price. If you use construction software, it should include the ability to generate a report that clearly tells your insurance company the split between residential and commercial projects you do.
Save money on your insurance by keeping a good, well documented safety record. Make sure your paperwork clearly defines which projects are residential or commercial. Documenting all of this takes time, many have streamlined the process by using software to keep everything together. When your organization grows, it’s worth examining products like ours that can help you grow for less by enabling fewer people to do more.
Please give our software a try, we think TrenLot can help you save money, run your organization more smoothly and be more profitable.