What contractors should consider at your next insurance renewal

By Tim Zepnick, Sentry Insurance

The work you do as a contractor involves risks at every turn. Employee injuries, unforeseen accidents, and property damage are only some of the hazards facing your projects every day. So, how can you protect your business?

An effective safety program will help you reduce risks, but it won’t financially protect your business from an unexpected loss. Fortunately, insurance can help protect your business and provide peace of mind if one or more risks turn into a claim.

Yet, in today’s construction landscape, your business—and its risks—evolve over time. And when they do, your renewal period is one of the best times to reassess whether you have the right coverages to protect your business. Let’s look at the conversations to consider at your next renewal to ensure your business and bottom line stay better protected.

Start the insurance renewal process early

The best time to start your renewal process is typically between 90 to 120 days prior. This timeline will allow you to assess your policy and, any recent or upcoming changes to your business. The more time you give yourself before renewal, the earlier you can plan for upcoming adjustments.

Identify changes to your business

Over time, your business changes. Your organization may add new equipment, hire new employees, or work with new vendors. In some cases, all of these may have occurred since your last renewal.

These adjustments could change your risk profile and, therefore, your insurance policy. The following questions can help you identify any changes that might affect your policy:

Did you add or reduce your number of employees?
Have you added, replaced, or reduced vehicles and equipment?
What were your gross annual sales and payroll?
Have you entered new agreements with vendors or subcontractors?
Did your business add or change locations?
Have you adjusted the products or services you offer?
Have you added technology or digital capabilities?
What changes to your business do you anticipate in the next year?
Has your organizational structure changed?

The answers to these questions will help you navigate the renewal conversation with your insurance agent. Just one change to your business could make the difference between full coverage or an uninsured loss.

Discuss industry trends

Once you’ve identified changes to your business, you’re one step closer to updating your policy—but don’t submit your renewal just yet. Outside factors like inflation, litigation, and underwriting results could influence your risks and coverages. Here’s an example of 2022 trends that might affect your policy this year:

Property insurance and material costs: Few industries rely more on metal and lumber than construction. Unfortunately, the cost of these materials has risen over the past year, and your policy will need to keep pace. Talk with your insurer to make sure you have an adequate amount of builder’s risk, installation, and property coverage included in your policy.
Workers’ comp insurance and payroll inflation: Labor continues to headline industry conversations. Similar to materials, worker wages increased in 2021. If a member of your team is injured on the worksite, this means they will receive higher temporary disability payments through your workers’ compensation policy.

That same injury will impact your loss ratio and experience modification rate (EMR) due to your business’s added claims history. To help manage your costs, develop and discuss a modified duty program with your insurer.

Auto and physical damage: Like property, the cost to repair or replace vehicles has escalated due to supply chain challenges and pandemic constraints. The time to repair vehicles is also taking longer than in the past. Because of these added pressures, talk with your agent about the appropriate auto deductibles and rental reimbursement

Start the conversation

If it’s any indication by now, your insurance policy takes collaboration. That’s why I prepared this article of tips to help you get a head start on your renewal. Don’t hesitate to reach out to your agent or local experts as you start the renewal process. They’re available to help you.

Remember, no two construction businesses are the same. The same is true for insurance policies. A few conversations today can help protect your business for tomorrow.