What are some of the issues you've run into regarding builders' insurance. Are premiums going up? What are some things you've done to offset or reduce the costs?

When I first started building houses back in the 90's my annual insurance for general liability was around $3000/year.

Then starting about 2000 nearly every major insurance company quit writing GL policies for builders in LA. My annual premium jumped to $8000 then to $12,000 and now it is up to nearly $18,000/year. All that increase and I've never had a claim against it.

People complain about the cost of houses today but if you look at all the overhead costs and the amount of nice things that are now 'standard' today, it is little wonder that costs have gone up so high.

My company, in California, is now paying $175,000 per year. We are also required to have third party quality inspections. We have never had a claim and have been told that we are lucky, because if there had been a claim against us we couldn't get liability insurance!

And the cry is for affordable housing! How can this become a reality with the overhead like this?

Our roofing contractor G/L insurance premiums have increased 185% over the past 3 years. We have maintained an excellent loss history (No claims ever!), yet we still face increased cost, fewer insurer's willing to even write the coverage, and those that will write want to restrict the type of work you can perform. Most insurance companies are excluding condos, townhomes & tract homes from coverage due to the influx of construction defect lawsuits filed in other states. Given these circumstances, there is not much than an individual contractor can do to offset the increased cost of insurance. The insurer's stance is basically "it is what it is" regardless of the good history of the contractor. There are two groups benefitting from these increased costs, the insurance companies and the underground contractors that can bid low because they have no legitimate overhead. Sadly, low bid is king a majority of the time.

We will continue to market our expertise and professionalism, and keep up the good fight!

Actually, there is a possible solution to the problem of ever increasing liability premium for the better managed contractor - form and/or join a Risk Retention Group. For those of you who were around in the 80's you will remember the days when liability insurance was almost impossible to get, at any price. Risk Retention Groups were a favored alternative for financing the cost of risk.

A Risk Retention Group is not difficult to form, can result in a significant cost of risk savings in the long term, and provide for loss control practices which will build suit protection/avoidance back into the industry.

Check with your local builders association for further details about Risk Retention Groups.