Construction companies tend to spend a lot of money annually on insurance premium. Frankly, most of them spend way too much money, but they don’t possess enough knowledge of the insurance quoting process in order to make the best decisions when the time comes. Or rather, their insurance agent(s) have not made it easy for them to determine which insurance carrier is offering the best insurance quotes overall.

Problems With Gathering Insurance Quotes

One of the hurdles that many contractors experience when it comes to bidding out their insurance is that they assume the insurance quoting process is exactly like the construction industry. Typically, a general contractor or project manager can requests bids from contractors and receive dozens of quotes. Whether unfortunately or fortunately, the insurance industry does not work this way.

Insurance carriers will only ever work with (accept a submission from) one agent per insured. Therefore, when a construction construction allows Agent-A to submit to Carrier-X, Carrier-X will never accept a submission from any other agents that year on your behalf. Therefore, it is highly important for contractors to become informed of the renewal process in order to obtain the most favorable terms and competitively priced insurance quotes available in the marketplace.

Here are 8 things a contractor should do to save money on their renewal insurance quotes

1. Assign the insurance markets to each agent you use. Don’t allow your current agent to “blanket” the marketplace place and “block the markets.” (It is easier for an agent to show up with a more expensive quote when he or she knows you don’t have any alternatives.)
2. Give each agent who quotes your insurance access to ALL rates, exposures, and the expiring policies themselves. (Put everyone on an even playing field.)
3. Set deadlines upfront for when you expect to receive each and every proposal from them. (I would suggest setting a deadline of no less than two weeks before your renewal date. Have the agents agree, in writing, to abide by this very necessary step.)
4. Require that each agent give you a complete copy of each quote he/she receives, as well as written confirmation from the insurance carrier directly for any declinations received.
5. Once you receive all your quotes, create a comparison between them and make a decision on which quote you would prefer to bind coverage with.
6. IMPORTANT STEP COMING: Negotiate, negotiate, negotiate. (It is amazing how many times an agent shows up with a quote and the insurance buyer agrees to purchase it without any negotiation on the terms or pricing. Tell—not ask—your agent that you want to see another 10% – 15% off the quote in question.)
7. Most underwriters “pad” or “inflate” their quote, with the mindset that they could lower the premium more if need be. As a general reference, there is usually another 10% that can be taken off the price, if someone would only ask for it. (Have the agent give you written confirmation, from the underwriter directly, of what the carrier can or can’t offer for premium credits/discounts.)
8. Once you negotiate the pricing down and any better terms (less exclusions, more favorable endorsements, etc.), bind the coverage.

It is not an exaggeration to say that there is usually a 10% padding on the premium for each quote an agent receives, for every line of coverage quoted.

QUESTION: Why doesn’t your agent request the underwriter to remove that “padding” and offer the lowest quote possible, up front?

ANSWER: Because every dollar taken off the premium is money taken out of the agent’s commission. It is for this reason that the agent is never looking out of the insurance buyer’s best interest.

In order to ensure the best results in the insurance renewal process, a construction company will literally save thousands (if not tens of thousands) of dollars by hiring a fee-based insurance consultant, such as Construction Risk.

Please contact us for a free consultation regarding how much premium we may be able to save your company.