In construction and development, one of the biggest drivers of overhead cost is the combination of General Liability, Umbrella, Workers Compensation, Commercial Auto, Pollution Liability, And Professional Liability insurance policies. Together, these policies can easily cost a 20 million dollar per year business over one million dollars per year.
Understanding the policy specifics of what is being purchased, at what times of the year, and under what brokerage is a critical aspect of keeping overhead costs in line. Most companies find a broker they like and when it’s time for renewal, the broker calls, has the client sign a few forms, “shops” the policies and presents renewal options.
I found over the course of the past 20 years of buying these policies that instituting some simple rules for renewal can save thousands or in some cases tens of thousands of dollars or more. Lets start with the renewal intervals. There is nothing wrong with having policy dates for typical types of coverage that don’t line up on the calendar.
For example, renewing WC at the same time as your GL should not be taken for granted. Large carriers love the opportunity to bind policies mid-stream as a way of earning new business. This creates a competitive environment and may result in a decrease in premiums during the policy period. Another important procedure to implement is shopping the insurance policies. It is always best to have two different brokers seasoned in your specific industry to get quotes from.
It is important to instruct the Brokers to only contact 2-3 wholesale carriers, otherwise quotes will not be competitive. Allowing one broker to quote from all the wholesalers doesn’t provide any transparency in the process. Be on the lookout for commissions and fees from the broker, they must disclose during the process, however this information can be hard to find on the quote itself.
In all, diligence here at renewal phase is a great way to put more money on your bottom line without involving extra employees to do so. If you’d like to discuss this with me in more detail, I can be reached at afroyd@coos2go.com
Anthony Froyd is a third Generation Construction Professional with over 30 years of experience in executive management including time as a Chief Executive / President and 20 years of construction management and development. His construction-related experience includes Development, entitlement, funds control, and rehabilitation and restoration of exterior building envelopes.