Percentage of hourly rate to cover insurance

[Moonlite]

What percentage of your hourly rate do you figure to cover health, workmans comp, general liability?

No politics please.

 

[Seabass]

5 million liability costs me about 170 bucks a month. pretty cheap when considered too injuring, killing someone and getting sued, losing house and $. And I haven't killed anyone in almost three years. I mean since I started working for myself.....

 

[Moonlite]

The reason for my post is that I have a $1 million liability policy through progressive. Costs $300 a month.
One of my customers deducted 5% from my bill for liability insurance. I called and asked him why he deducted insurance from my bill. He said his insurance required me to have more and being that I didn't meet their requirements they would bill
Him 5% of every invoice I turned in. Also told me that I needed to supply him with proof of workmans comp. but he knows I don't have it. I told him no I have medical insurance for my self so I felt I didn't need workmans comp. he told me that was not sufficient for his insurance. That I needed an actual workmans comp policy or he was gonna have to deduct 5% for it also. Well the only way I can pay for this stuff is to raise my rates. So I'm trying to figure out about what I will have to go up.

 

[Twisted]

I think you're getting jerked around. The insurance end of a job is one of the first hurdles to cross when hiring a contractor. They would not have let you on site without meeting their requirements. I'm guessing this is a customer that you want to stay away from.

As far as a percentage. It's basic math. You know what your monthly or yearly costs and profits are.

 

[tbone1471]

I agree. You are getting screwed. If we didn't have a specific type of insurance then we were told get it or get lost. From a workers comp standpoint, depending on the state there is an exemption form for corporate officers. So if it's just you you may be able to opt out, again it depends on the state.

 

[hetkind]

I would hesitate to use a contractor that does not carry state mandated workers compensation insurance. If one of the workers gets injured on MY jobsite, and I knowingly used a contractor who used incorrect hiring and insurance practices, then I can be liable, and as a unincorporated sole owner, I can be PERSONALLY liable.

I have not looked lately at workers compensation rates, but 5% of payroll is not unusual in heavy construction.

Howard

 

[tbone1471]

I had the same reservations but in delaware we have the option to opt out. Workers comp is really a strange thing for me. We pay it at a rate of 11.8% of gross payroll. We have never had a claim. Ironically if an officer is injured on a job they cannot submit a claim. I think this is why we have the ability to opt out with the state supplied forms.

 

[CM1995]

We pay around 11% of payroll for WC.

Depending on the job, cutting 5% of the total bill is too much. Labor usually accounts for 30% of my job cost with 30% going to materials and equipment, then 10% for O&P. Of course this varies job to job depending on what the project involves.

A single owner/operator can opt out of WC through the state here in AL. This is acceptable to most insurance companies and GC's if it's a true one owner/operator company.

As far as them cutting an additional 5% for GL, that's BS. They should've made the insurance requirements part of the contract before signing.

I have one large GC that I work for that requires specific job site endorsements. These endorsements usually run $700-1500 per project. Instead of absorbing that cost into the bid, I just include a single line item for the insurance on my bid.

Same with an umbrella policy. Most of the GC's I work for do not require it but on occasion I do run across the requirement. If I get the bid and the insurance requirements were not specifically spelled out in the bid documents, I negotiate the additional insurance costs into the contract or not sign the bid.

 

[hetkind]

11% seems to be a good figure. When I was a "Certified Source for Safety Consult" in the State of Texas 20 years ago, I got very involved in workers comp issues and insurance. I would be very concerned about going self insured on workers comp, unless I was able to implement a very good safety program and get some reinsurance for excessive risk beyond my set aside amount. Setting aside 8% of payroll, 2% for safety program cost, and 1% for excessive risk worker comp above and beyond 1 years set aside of 8% would give you a positive gain after the first couple years, if the safety experience stayed good.

Howard

We pay around 11% of payroll for WC.

Depending on the job, cutting 5% of the total bill is too much. Labor usually accounts for 30% of my job cost with 30% going to materials and equipment, then 10% for O&P. Of course this varies job to job depending on what the project involves.

A single owner/operator can opt out of WC through the state here in AL. This is acceptable to most insurance companies and GC's if it's a true one owner/operator company.

As far as them cutting an additional 5% for GL, that's BS. They should've made the insurance requirements part of the contract before signing.

I have one large GC that I work for that requires specific job site endorsements. These endorsements usually run $700-1500 per project. Instead of absorbing that cost into the bid, I just include a single line item for the insurance on my bid.

Same with an umbrella policy. Most of the GC's I work for do not require it but on occasion I do run across the requirement. If I get the bid and the insurance requirements were not specifically spelled out in the bid documents, I negotiate the additional insurance costs into the contract or not sign the bid.

 

[Moonlite]

I don't mind getting more insurance if that is. gonna be the norm.
But when I got my G L I asked about it covering the human factor. I was told that G L only covered property and equipment. And that the human factor would be covered under workmans comp but only if human factor was on my payroll.

Maybe I need new agent.

 

[tbone1471]

Your agent is right. The norm is 1 million glad. You should really look into your state's stance on owners having to have wc. Most companies are surprised that it is not required if your a solo operation at least in my area. But when you have the state paperwork they get it.

Our norm is wc. 1mill auto 2 mill umbrella 1 mill glad plus all sorts of additional insured, inland marine, and riders for site specific work.

Are you dealing with an insurance broker or someone specializing in commercial insurance? We price shop every few years and the difference in premium and coverage from ine to another can be millions in coverage and 10k of thousands in premiums.

Don't let someone talk you into being over or under insured.

 

[CM1995]

Your agent is correct moonlite as tbone stated. GL covers your completed work and public exposure, it does not cover you or your employees.

I agree with tbone, shop your insurance as those agents get lazy if they've had you a few years..

 

[ohiofleet]

when i fist started working for my self there was a guy that i sub contracted to that had a repair biz i and when i started with him we talked over what i would bill to him then he billed his customer then when i started sending him bill when he payed he had deductions on them just like your customer even though i had all my own liability i quickly whent to his shop and put a stop to it and got full payment he was just trying to put more in his pocket and that is all he is tring to do i would tell him to pay all bills in full or stop doing work or add 30% to the bill but i never seen anyone require more than 1mill i hate a lier

 

[Seabass]

The reason for my post is that I have a $1 million liability policy through progressive. Costs $300 a month.
One of my customers deducted 5% from my bill for liability insurance. I called and asked him why he deducted insurance from my bill. He said his insurance required me to have more and being that I didn't meet their requirements they would bill
Him 5% of every invoice I turned in. Also told me that I needed to supply him with proof of workmans comp. but he knows I don't have it. I told him no I have medical insurance for my self so I felt I didn't need workmans comp. he told me that was not sufficient for his insurance. That I needed an actual workmans comp policy or he was gonna have to deduct 5% for it also. Well the only way I can pay for this stuff is to raise my rates. So I'm trying to figure out about what I will have to go up.

Agree to his terms, but just add a .5 to an hour extra on each job. Let him think hes getting his way, but let him actually pay for your insurance. Do you need the work from him? If not tell him to jump in a lake.

5 Million is the standard in BC, Canada for anyone to hire you. You don't need it by law, but many outfits wont hire you unless you have it.

An old contractor I worked for, and as a customer now told me he always charged more to people who were dicks, who he didn't like. I follow suit. I will always get the last laugh.