By: Don Bury
Most contractors don't know how powerful it is to publish their own insurance bid specifications every year. When you can do this, you can interrogate the market at will, and save a lot of money. This applies to Liability, Auto, Property, and Workers Compensation Insurance.
1. Your bid specifications should provide everything broker needs to produce a quotation.
It takes time and effort to build a full set of specs, but well worth it. They are pivotal to driving down insurance costs. Once they are developed, updating them once a year is easy.
You can hand your bid specs to any broker you please. We measure quality by an absence of questions from brokers. If you get questions, record them along with the answers into your bid specs.
Your bid specifications should describe your operations, exposures, coverage and certificate requirements thoroughly. They should updated annually.
2. Tables in bid specs
Your bid specs should contain lots of tables - vehicles, drivers, sales, payroll, subcontractor costs, equipment, job history, and of course your policy & loss history we covered in Chapter 5. You can get these tables set up in spreadsheets, and they are easy to update. We use an online database to help us keep our clients organized.
Vehicles Year, make, model, Vehicle ID Number, gross vehicle weight, garaging location, cost, any special equipment, loan number, lender name and address
Equipment Show year, make, model, item, Serial number, actual cost, current value, year purchased,
Drivers Name, license number, license state, birth date, date hired
Sales Show 5 years history of sales by type of work. Break out by Commercial vs Residential, remodeling versus new construction. Project the same variables for the coming year.
Subcontractor costs Show 5 years history of subcontractor costs by type of work they did. Project the same variables for the coming year.
Payroll Show 5 years payroll history by workers compensation class code. Show average wage for class, and number of employees. Project the same variables for the coming year.
Job History Itemize jobs you have completed. Do 5 years if you can, but at least present what you did last year. Break out by Commercial vs Residential, remodeling versus new construction. Report jobs you expect to do next year.
3. Description of Operations
Describe what you do. The job history report above really helps save words here. You can probably find a good description of your general operations already written on your web site.
3. Questionnaires -
Brokers have to fill out lots of questionnaires. Get them, and complete them. Keep them, and update them each year. Do not allow a broker to interview you, then fill out the form and not give it to you. This is a common mistake. You have every right to possess a copy of information provided to insurance companies. Don't let brokers tell you otherwise.
Questionnaires include: Contractor supplementals, Workers comp supplementals, and the standard accord applications for the various lines of coverage. Getting these in your records is a good step in the correct direction.
If your broker doesn't want to give you these, it is probably time to have a heart to heart talk with your broker, or consider getting a new one. If you start a new conversation with a new broker, you can establish an agreement you will get the applications in exchange for giving the new broker a chance to quote. This move will go far towards driving down your expenses.
4. Coverage
Brokers pride themselves on designing coverage to meet your exposures. Request a detailed listing of your current coverage, and ask for how it could be improved. Do this with each broker you deal with. This is a practical way to get a coverage spec page set up for your bid specs.
5. Locations
For each location you occupy (not your job sites) brokers need to know quite a bit of information. Ask your broker for the applications for property coverage, so you can be sure all the information is complete and accurate. Of course keep a copy of the application for your bid specifications.
6. Certificate needs
Make it clear what you need in the way of certificates, right in your bid specs. Providing examples of certificates you need, especially the difficult ones can save you a lot of headaches later.
Here's more help getting lower insurance rates and better coverage: http://www.contractorinsurancetoohigh.com
also: http://www.icrs.biz
Phone 800-760-1867 email: donbury@icrs.biz
Follow the system that has delivered $20 million in measurable savings to contractors and business insurance buyers. From the author of The Buyers Guide To Business Insurance (1993)
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