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View Full Version : Commercial Account - not enough insurance


1MajorTom
02-15-2005, 09:00 PM
Let's say you had a commercial account last year, you had insurance but for some reason they never asked to see your insurance papers even after they signed the contract. You had the account all season long and it brought in $2900.00. You get a letter in the mail telling you that all contractors are being asked to provide proof of insurance by March 9th, they are updating their records. As you read the fine print, you realize that they are requiring 2 Mil, you don't have enough. You feel truly that you don't really need to carry this much as your business is primarily resi.
How much of an insurance rate increase would you be willing to pay to keep this account? Just starting conversation, I will call the insurance company tomorrow to see how much more it will cost us.

FrankenScagMachines
02-15-2005, 09:05 PM
well Jodi, when i got my $1 million policy, the starting amount was $500k.. it was only another $50 a year to make it $1 million. So if you are doubling the money, that might be another $100-150 a year. Even if it was $200 or even 300 more a year (doubtful) i think it'd be worth it probably. I guess it depends on how profitable the job is, not how much it brings in :)

SodKing
02-15-2005, 09:07 PM
you should be able to buy an umbrella policy for just that account if you need to. Whatever it cost I would tend to pass it along to the client if it were purchased for that account specifically. Though as I state that 2 mil is the level of insurance I carry normally.

JB1
02-15-2005, 09:14 PM
We did a job a few years ago that required 5 million in coverage, don't really remember what it cost but we just added it in to the costs,and nobody said a word.

paponte
02-15-2005, 09:16 PM
you should be able to buy an umbrella policy for just that account if you need to. Whatever it cost I would tend to pass it along to the client if it were purchased for that account specifically. Though as I state that 2 mil is the level of insurance I carry normally.


If you are not already covered for $2mil, an umbrella is a cheaper way to get coverage for specific accounts/purposes. As stated I don't believe it would be all that much more to up your coverages. :)

LLandscaping
02-15-2005, 09:16 PM
It the contract was only producing $2900, I wouldn't pay more than $500 extra a year. They would have to be a good account that pays on time.

specialtylc
02-15-2005, 10:21 PM
You need to talk with the customer about the amount of insurance required. It may be a corporate form letter that they send out to everyone on their books. I had a similar situation last year. Mowing job of $30 per week and I get a letter requesting them to be listed as Additonally Insured on our policy. I told the local office I would not do that for such a small job. They said it was a form letter sent by the corporate office and to just disregard it.

LLCO
02-15-2005, 10:22 PM
In past jobs(cable tv), $5M was our min standard as set by our atty's. The reality was that we had "discretion" over those requirements. We would require those contractors that were working in customers homes to carry $5m. The folks that that would do directional boring asked to carry $2M and and we reset our standards because we felt $5M was too much to ask... the folks that did our lawn work asked for 500K and we felt that was reasonable and made an exception there as well..

Might be worth asking.. sometimes accomodations can be made ...the best arguement that can be made is what is the potential exposure.

alpine692003
02-15-2005, 10:24 PM
My min is 2million

ed2hess
02-15-2005, 10:39 PM
well Jodi, when i got my $1 million policy, the starting amount was $500k.. it was only another $50 a year to make it $1 million. So if you are doubling the money, that might be another $100-150 a year. Even if it was $200 or even 300 more a year (doubtful) i think it'd be worth it probably. I guess it depends on how profitable the job is, not how much it brings in :)
Your rates seem very low...are you taking about commericial liability or homeowner liability insurance? If it is commericial who is the insurance with? And on the subject of 1.0 million or 2.0 million, some of the accounts will allow less if you are not using any workers, i.e. solo.

impactlandscaping
02-15-2005, 11:01 PM
We raised ours this year to secure 2 Eat N Park restaurants. It was the first time anyone requested more than 2M..It wasn't really that much, maybe 25% more on the year.

JB1
02-15-2005, 11:08 PM
Actually what we bought one time was a 9 million umbrella was right at $1500.00 I about fell over at the time , but I just added it in.

Randy Scott
02-16-2005, 12:25 AM
An additional million for us was $500 a year. A $2900 account isn't worth having it specifically for them. We do have it in hopes of better coverage should something happen. Therefore we spread the cost out.

So, if I was really watching my budget and would only need it for this one account, I would probably get rid of the account. Tacking $500 onto a $2900 account is around a 20% raise. Are you still going to be competitive now for this bid? What about profit? A $2900 account is nothing personally. I find it hard to believe you could just add that cost to the bid with it being such a small account as it is.

Soupy
02-16-2005, 01:48 AM
Let's say you had a commercial account last year, you had insurance but for some reason they never asked to see your insurance papers even after they signed the contract. You had the account all season long and it brought in $2900.00. You get a letter in the mail telling you that all contractors are being asked to provide proof of insurance by March 9th, they are updating their records. As you read the fine print, you realize that they are requiring 2 Mil, you don't have enough. You feel truly that you don't really need to carry this much as your business is primarily resi.
How much of an insurance rate increase would you be willing to pay to keep this account? Just starting conversation, I will call the insurance company tomorrow to see how much more it will cost us.

Jodi, don't you have insurance with Erie? My policy didn't cost much to go to 2 million. I think doing Residential work is just as dangerous as commercial work. If you throw a rock/tool and it kills a kid walking by, then you will wish you had a 50mil policy.

Turf Dancer
02-16-2005, 04:00 AM
I ran into this situation and my agent told me it would be another $350 per year.

65hoss
02-16-2005, 10:12 AM
For them...no way would I go up. Why? Doesn't pay enough to increase the coverage. I went from 1mil to 2mil and it went up by almost $1k. No way would I do that because a $2900 account wanted it. A $2900 account weekly doesn't have a tremendous amount of profit on it anyway, no way would I reduce it even more by going up in coverage just for them.

HOMER
02-16-2005, 10:32 AM
$2900.00 a year is only $241.67 a month. I wouldn't even pursue this because that can be made by adding 2-3 residentials accounts......or 1 good one.

Wouldn't fool with it.

cantoo
02-16-2005, 08:04 PM
Jodi, everyone makes good points but it depends on where you plan on taking your business in the future. We went from 1 mil to 2 mil a couple of years ago, our rate didn't go up that much but it did make us hussle a little to get more commercial jobs just to justify it. We now do a bunch of commercial jobs and having the insurance was why we got some of them. The other local companies didn't want to pay the extra just for one job. This might be the little push you need to go after " reliable" commercial jobs to add to your resi's. My wife prefers the commercials because we can do them whenever we want. We are also getting more pesticide work now because we have the 2 mil coverage.

1MajorTom
02-16-2005, 09:10 PM
$2900.00 a year is only $241.67 a month. I wouldn't even pursue this because that can be made by adding 2-3 residentials accounts......or 1 good one.

Wouldn't fool with it.

It is a little more than that, I believe you are dividing by 12 months, we are dividing by 7.5 months.
but still that's what I'm afraid of, it's not going to be worth the increase. I was sick today, so I didn't call Erie, I have to do it tomorrow to put my mind at ease just to see where we are at.

1MajorTom
03-04-2005, 05:04 PM
$237.00 extra a year to jump it up to 2 mil. we ended up increasing it, we'll make it up somewhere, not just off of them, but with price increases in general.

impactlandscaping
03-04-2005, 05:13 PM
It also looks better to some commercial property owners as well , Jodi. If mostly everyone is carrying the minimum in the 'Burgh, that's just a little something "extra" to differentiate you and Matt from all the other bidders. PS- I really enjoyed that pic of the shiny Metro sitting on the nice green lawn....sigh....

1MajorTom
03-04-2005, 07:14 PM
PS- I really enjoyed that pic of the shiny Metro sitting on the nice green lawn....sigh....

ya, me too, we are ready for some decent weather here. We went out today and put out some 18x24 signs that we had printed up, put about 10 out in a few neighborhoods we want to work in. Surprised the heck out of me when someone actually called today. When I asked how they heard about us, they said, "I saw your billboard at the Exxon station and again at ValleyView Drive." I'm thinking, "billboard?" our tiny 18x24 sign is nowhere close to a billboard, but I'm glad they saw it. :)
Let's me know someone else is thinking about spring getting here too.

tiedeman
03-04-2005, 07:35 PM
$237.00 extra a year to jump it up to 2 mil. we ended up increasing it, we'll make it up somewhere, not just off of them, but with price increases in general.

I would have increased it as well