Large Contractors Insurance
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INSURANCE OPTIONS AND STRATEGIES FOR LARGE CONTRACTORS
Are you a contractor that does over 10 Million Dollars in sales a year? If so you know that the larger you get the larger your insurance bill is. In some cases it is enough each year to buy a normally priced house in most areas. You have obviously have some smarts to have gotten your business to where it is today. You are constantly reviewing your practices to see what you can do better. Insurance agents are constantly calling you to say they can get you a lower price. The fact of the matter is you should realize you have graduated from using high school insurance agents that try to sell you on price. You need to get someone with a PhD for your insurance solutions. You might ask yourself what the hell is this guy talking about. I just want to get my insurance at the lowest possible price with the coverage I need. Well what I am talking about is insurance solutions, not just low cost insurance. At ContractorsLiability.Com we will dive deep into your current coverages and policies. There are many options available to large businesses that are not available to small contractors. The first and probably most recognizable for the savvy business owner is becoming part of a “Captive Insurer”. This is usually defined as an insurance company that is owned by the insureds, ie you and other business owners in similar situations. The main purpose of this is to cover your insurance risk. You also get the additional benefit in that the captive underwriting profits can then be set up to be paid back to you or your heirs with little or no tax liability. If you are paying over $200,000 in General Liability Insurance per year, these profits can be in the millions when you decide to sell your business or retire. This money will be retained by you and not used to line the pockets of people like Warren Buffet.
WORKERS’ COMPENSATION INSURANCE
Workers’ Compensation Insurance is a major expense for a large contractor. Going to my point of needing a PhD working on your insurance solutions, maybe you current agent has told you what your current experience modification is.(Here is Blog about Experience Modifications if you are not sure.) Have they ever sat down with and explained to you how that number was calculated? Have you ever checked to make sure it was calculated correctly? Did you even know there was something you could do about it? I guarantee your agent has never done this with you.
WORKERS’ COMPENSATION EXPERIENCE RATING FORM
(PLEASE NOTE THIS ASSUMES YOU HAVE A BASIC UNDERSTANDING OF HOW WORKERS’ COMPENSATION WORKS. SEE THE BLOG REFERENCED ABOVE IF YOU HAVE ANY QUESTIONS OR JUST WANT A REFRESHER.) The basic Workers’ Compensation Experience Rating Form lists the Following:
- The class codes for the various types of employees you have working for you. It is very important that these are correct. As a salesman classified under a roofing code could be costing you thousands of dollars. Also the class codes need to be reviewed themselves to make sure they accurately reflect the work the employee is performing. Again the wrong class codes listed can cost you money.
- The amount of payroll for each code. Again this must be reviewed for accuracy to ensure the payroll is being properly classified.
- The expected loss ratio per $100 in payroll. This means for every $100 of payroll, in this class code, other companies, on average, have experienced this amount of workers’ compensation claims.
- Expected Losses. This is the amount of payroll multiplied the expected loss ratio.
- Actual Losses. This is the amount of the actual losses incurred by your business.
- Claim Data. This is the claim number from the insurance carrier and it identifies a specific case file. Specific claims will be listed individually if they are open. This information can be quite useful in identifying trouble spots. As you know the more claims you have the higher your experience modification will be. Let us say after review of this claim data you see one employee Homer Simpson in the warehouse has had three accidents in the last 2 years. This employee is either on a losing streak or is just plain bad news. Simpson is making $37,000 a year. He is costing you an additional $100,000 in Workers’ Compensation premiums per year. It might be time for some downsizing or at the very least additional training.
Has your current agent ever went over anything like this with you? The answer is probably not. That it is why it is time to graduate to ContractorsLiability.Com.
CHALLENGING YOUR EXPERINCE MODIFICATION
There is is good chance you do not even know what your experience modification is let alone how it is calculated. It is also highly unlikely your current agent has reviewed it for accuracy.
Inaccurate experience modifier calculations are often the result of mistakes in payroll amounts, erroneous job classifications, improper claim reserves and open claims that should be closed. A comprehensive process should include a detailed analysis of an organization’s payroll, class codes and claim history, which will ensure the experience modifier is accurate and that workers’ compensation premiums are reduced accordingly.
We will complete a comprehensive evaluation of exposures before submitting your information to underwriters. This will allow your business to take control of your workers’ compensation costs, rather than allowing a carrier to simple dictate what you will pay.
An incorrect experience modification may also exclude you getting coverage in preferred markets. It may also in some instance bar you from bidding or getting large contracts that require a minimum Experience Modification.
ContractorsLiability.Com will also work with you on proactive solutions to improve your safety record. Along with preventing employee injuries it will also save you money and improve employee morale in the long run.
CAPTIVE INSURANCE PROGRAMS
Captive insurance is an alternative risk financing solution for companies of medium to large size. It is a fact that 90% of the Fortune 500 companies own at least 1 captive insurance company arrangement. As a captive owner, you are basically creating your own insurance company. Either on your own or by joining a group of similar businesses. This allows you to gain ownership and control of all aspects and costs of your insurance programs while creating the potential for significant financial gains.
Three important benefits of a captive are:
- Save and Manage costs. These include lower premiums, greater cash flow and capturing investment return
- Increased Control. You will be able to design policies for your specific needs, lower claim costs and management, eliminate insurance company built in policy profit. You will also gain a better understanding of how to mange risks
- Improve your risk management. You will reduce your overall cost of risk by partnering with like minded business owners in your industry. This allows for sharing of knowledge and experience to operate your business with greater efficiency all the while reducing losses and improving the safety of your employees and clients work environment
COMMERCIAL VEHICLE INSURANCE
Most larger contractors have an extensive fleet of vehicles. The cost of insuring these vehicles is expensive. There are a number of factors that drive the cost are:
- Area of operations
- The size and weight of the vehicles
- What the vehicle is being used for
- Trailers and other equipment attached to the vehicles
- Value of the vehicles
- Driver age
- Driver history (tickets & accidents)
- Prior losses
As you can see some of these you have no control of. However the main components of cost are driver history and prior losses. We can work with you to establish safety programs that cam reduce accidents and losses. This will increase your bottom line by lowering insurance costs. Also we can review your driver history. An example of this would be after reviewing your driver history we are able to find out that one employee Barney Gumble has 2 driving under the influence convictions and accidents and tickets on his record. The simple change of prohibiting him from operating vehicles could save you thousands. The problem with things like this is that you do not know what they are until you investigate. The average insurance agent does not normally do such active investigations and advise you of the steps you can take to reduce costs.
THE NEXT STEP
At ContractorsLiability.Com we understand you have many questions regarding our insurance solutions. You will want to know how these options and strategies will benefit your company’s cash flow.
If you are considering the possibilities of graduating to a more complex insurance structure, it is time you spoke to our industry experts who outline a personalized plan for YOUR company. For more specifics on how these options and strategies fit your company profile, schedule a free consultation with one of our brokers today. Turn your premiums into profits!!!! Fill out the contact form or call us at 866-255-1950 and let us know you want to speak with someone about these options and strategies.
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