Structural Liability Insurance 2

[sigma1]

It appears that my structural liability insurance premiums increase by 40% yearly. At this rate small offices would be out of business very quickly.

Any info on cost, limits, etc. would be appreciated.

 

[Lutfi]

Welcome to the club.

My office we do multi-discipline engineering. Our insurance couple of years back went from $6 k to $24K with same insurer. We never had any problem and or claims. We consider ourselves to be very high quality engineering firm. Half of our revenues comes from federal work that does not require liability insurance. All they require that we fix our errors at our expense. We never had any of those situations either. The brilliant insurance company adds the revenue to our company's total income that makes our rates go up.

We have PEs in all disciplines. We have engineers with postgraduate degrees. Average experience is over 20 years.

I am right now in the process of renewing our policy. The current underwriter came back with about 30% increase with $10,000 deductible.

Here is the way I see the insurance cost: Lets say that the policy will be around $10,00 annual premium. To earn this income, I have make $10,000 profit which means that I have to do $100,000 worth design work and be guaranteed that I will have 10% profit. We all know that 10% is not always three. You make some and you lose some.

You can go without, which I do not advise! The other option is to shop for more and increases the deductible. We carry one million and that is all we can afford. If a client wants more than one million, we can get it but we ask them to pay for the additional premiums.

I see no end in sight for this problem. I think sometimes that we are lucky to find an underwriter! I think the health insurance is much bigger of a problem for us and far more expensive.

This is a fact of life and additional stress for the small firm owners.

Regards,



Lutfi

http://www.cdeco.com

 

[M1Can]

I went through similar situation this year. Our rates were going to double so I spent some time trying to get more quotes. In our area(Ontario Canada) one company seems to have the majority of business and we were having trouble getting quotes from anyone else.

I looked at our historical rates ($1 000 000 coverage with deductable edging up every year)noting we have never had a wiff of a claim.

First 3 years (small business progam) $2.10 per $100 billings. Increased by about 20% per year until it reached $5.50 per $100. When we got their quote for this year it was going to $11.00 per $100. The agent explained it was due to our billings increasing, so I converted the premiums to $ per $100.

In the end I did find another insurance company , my rates dropped back to about $5 per$100 and my deductable dropped from $5000 to nil.