Mark, you asked about Insurance Costs

Michael - Warm Floors

Liability and Worker’s Compensation Insurance have skyrocketed in California. Our rates have more than doubled in the past few years, -- and we have no claims where we have been faulted, a good experience modifier and 25 years in the field!

We did get listed in two claims, one was a cracked floor tile (actually 2’X4’ concrete siding panels) used on the floor by a mason who had never done a floor and did not fill the substrate cracks with anything, in contrary to our written advice to fill with epoxy or use a crack isolation membrane). This was a decade ago, and the only time our insurance company paid anything. Our burden, without any fault was $ 10,000 or 15%; the architect, contractor, mason, and manufacturer paid the rest. The insurance company refused my request for a court trial; too expensive, even if we win; cheaper to just settle. The other claim was spurious, and we were fully released. (They sued every contractor on the job just to get all of their insurance companies to help in the defense!).

Nonetheless, our rates have shot skyward, and we shop the hell out of our renewals! But wait, there is more! You might think that if you pay more, you get more! No way.

Most of our clients want Additionally Insured Endorsements and in the past, it was not a big deal. There are two basic forms, the 11-85 and the 10-93, with the major difference between covering work-in-progress and also covering work-done. Our liability insurance company inserted a new phrase, that the Additionally Insured were only covered by our insurance in case of Sole Negligence, which they slipped into the middle of the paragraph. Very few things, (bad solder joint being one) can be ‘sole’ negligence; 90% of problems are shared negligence. In other words, our insurance company limited it’s coverage dramatically.

And our insurance companies are surly and unhelpful and far from friendly. For this, our rates have doubled. And from what I hear from others, we are doing better on rates than most. Alas, this means we are going to have to raise our overall prices this winter for the first time in 2.5 years. Yes, it’s about time, but I was kind of hoping to use the raise to fund our revived 401(k) program, our Cafeteria Section 125 Plan and employee raises. Heck, it could even have provided some profits and maybe a nice vacation for the owner! Drats.

Maybe it will make you feel better (probably not!) that we missed crimping a fitting recently, and filled a sunken den on a brand new house, was not discovered for a week, which cost us $ 8,000 for repairs and new carpet. We did NOT turn it over to insurance……we would have ended up paying it anyway through increased rates over the next few years. We just (gulp) paid it out of pocket.

We also find that the General Contractors we work with have tightened up their contracts, revising indemnifications so we are even responsible for problems caused by other trades or the GC, asking for greater insurance protection and more difficult payment terms, most of this caused by pressures from their insurance companies and attorneys. We have had to turn down a few contracts, and when we do accept them, have a page or two of amendments written by the help of our attorney. Not fun!

Did I mention our Health and Dental Insurance increases? Also doubled, for less coverage, more exclusions, more co-pay, and no improvement in service. And don’t forget auto insurance, another long sad and expensive story.

Sometimes I ask myself if I would go in this business today, knowing what I know now about the business environment, and frankly, I don’t think so. I would have come to work for you, have all the technical fun, get paid the big bucks, and go home at night and relax!

Michael

Dave Yates (PAH)

Ditto

Well said Michael. Same here on the east coast. Even a rider for materials in transit, which was just another way to squeeze contractors. Then they added another limiting their liability for single pieces of equipment in storage - such as expensive refrigeration equipment awaiting job site readiness.

Used to be a simple policy back when I first struck out on my own. Workman's comp went up 12G's in one year alone. Another dramatic increase this year - blamed on 9/11. We're shopping once again.

Imagine how costs will soar if some practices used today turn out to be deadly

To Learn More About This Contractor, Click Here to Visit Their Ad in "Find A Contractor"

Jamie Hall

and how...

and you all are not alone -- I'm a PE and my sister is a RPT -- she can't even GET malpractice insurance, and my Errors and Omissions premium is unbelievable -- a factor of 10 in the past three years. And all of it goes to pay the lawyers to defend against frivolous suits... don't get me started.

Jeff Lawrence_24

Lawyers

And their clients.

One of these days there may be a loser pays law passed. That will kill all of of the frivolous lawsuits