* Credits for past loss history and risk management controls
* Use carrier approved Home Owners Warranty on all sales
– dispute resolution features may reduce chance of lawsuits
– some carriers offer 25% discount
* Use carrier approved subcontractor agreement
– sub insurance requirements
– indemnification / hold harmless in favor of builder
* Be proactive to solve customer complaints
* Do business with builder insurance specialist
Your underwriter has the ability to apply certain discretionary discounts to your policy based on factors such as your premium size, competitiveness of market, loss history, and risk management practices and programs. The total discounts available are usually around 30% but the underwriters are stingy and tend to save them for their largest and most profitable accounts that are the most proactive in preventing claims.
The use of insurance carrier approved home owner warranty programs on all new home sales can lower your costs in two ways. First, they can lower your long term premiums to the extent that they protect your loss record by reducing construction defect claims. Many experts believe that the dispute resolution services that are offered by certain home owner warranty companies greatly reduce the risks of construction defect lawsuits filed against the builder. Second, one carrier that we represent, offers an up front 25% discount for the use of home owners warranty products from their approved list of five providers.
Next, the use of carrier approved subcontractor agreements is a vital part of your risk management program. A well written subcontractor agreement is a form of contractual transfer that allows the builder to shift the risk of many losses to the sub. A well written agreement will specify the insurance requirements that the sub must comply with and will have a hold harmless and indemnification provision in favor of the builder. The General Liability carriers that insure builders definitely want to see mandatory subcontractor agreements in place on all subs. They’re an indication of strong management practices and will reduce long term premiums to the extent that they protect the builder’s loss record.
And next, builders should be proactive in addressing home owner complaints. It makes good business sense to be willing to spend several thousand dollars out of pocket to make a potential claim go away. What you have to remember is that the few carriers that do a good job of writing General Liability insurance for builders will become alarmed if you turn in two or more small claims over a three year time period and this will result in the loss of policy discounts and possible non renewal of your policy. Also, your documentable loss record stays with you and any new carriers that are approached will be wary if you have several claims on your three year or five year loss history.
And finally, do business with an insurance agent who specializes in insuring builders. An insurance agent who has a large book of builder business should represent several carriers that will offer you options. No one insurance carrier can meet the needs of all builders. At different points in time, different carriers run hot and cold on their competitiveness. A good insurance agent will keep you informed about what’s going on in the marketplace for builder insurance and will offer a renewal quote with a different carrier if your carrier is no longer price competitive.
Thanks for taking the time to learn more about your General Liability policy. Please call our office and ask for our contractor department if you have any specific questions.