How to Save Money on Your Business Insurance Costs

Want to save money on your insurance costs? Got your attention now, did not I. Two issues that seem to come up on a regular basis that can cost you a great deal of money are current certificates of insurance from the various subcontractors you use to the use of proper classifications for your employees on your workers compensation policy.

Whether you do commercial or residential work your clients are asking that you do more complicated jobs. These projects require the use of many different disciplines to bring a job together. To complete these jobs many of you rely on subcontractors, they perform many and varied jobs. Electrical work, carpentry, irrigation, masonry, tree work and pool work are few that come to mind. As the contracting party you are responsible for all of the various entities that you use to complete a project. In the event that a claim for bodily injury or property damage is the result of the actions of a subcontractor that you hired you / your insurance company will absolutely be responsible for those actions. You purchased insurance for this very reason and hopefully you only hire subcontractors that are insured, thereby making their insurance company responsible. Insurance companies make a nominal charge to your general liability policy for insured subcontractors, they will change you the appropriate rate for uninsured subs. People that use a lot of subcontractors typically have a system in place to see that all subs are insured and keep updated certificates of insurance on file. The easiest way to see that you have current information on file is to make this information a condition of payment. It goes without saying that once payment has been made it is much harder to collect this information. The more organized you are the easier the audit process is and the less likely that you will be charged for uninsured subs or even insured subs that you did not collect certificates of insurance for.

Workers compensation and proper classifications. You've been surprised at how many audits I see where employees end up in a higher classification because people are unprepared for the audit, unaware of the process or just not informed that different classifications exist. There is a process and manual that dictates classification rules. The more accurate your records the more opportunity you have for premium savings. In some cases it is possible to split a single employees payroll between two codes, say landscape gardening and lawn maintenance. The key is accurate records and who ever meets with the insurance company auditor must be educated as to the process. The rate for every job description is different. I have clients that have as many as seven job classifications on their workers compensation policy, each with a different rate. In some cases rate difference between landscape gardening and lawn care is 100%; that adds up fast when improperly classified.

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