Commercial Liability Policy

[J Scott]

I'm having a heck of a time getting a commercial liability policy for me and my business, and I'm looking for provider suggestions (or any suggestions, for that matter)...

First, I've never had a commercial policy...talking to my insurance agent in the past, we were pretty comfortable with all my subs having liability and workers comp, and me having a big personal umbrella policy for personal asset protection. Now, I'm in the process of getting my contractors license in Maryland, and one of the requirements is a commercial liability policy.

I've called agents for a couple of the big insurers (Erie, Travelers, etc), I explain what my business does -- this is always a little tricky explaining that I'm sort of a GC but that I own all of the properties myself -- and then within a couple days they come back and say they can't help me. I've learned that if I say I'm a "builder" instead of a "GC," that helps a bit. I've also learned that if I say that I am the on-site manager, that seems to get a better reaction (implying that I don't just sit in an office and trust my subs to not screw up). And I've learned that if I say I own all the properties, don't have employees and don't do any of the contracting myself, they seem to like that as well. I also say that I ensure all my subs provide proof of insurance.

Unfortunately, they all come back and say their insurers refuse to underwrite me. I was told by one agent that Erie Insurance has backed off writing policies for homes being resold. I was told by another agent that it would be no problem if I previously had commercial liability (and could provide loss runs from previous years), but since this would be my first policy, she couldn't help me (and that I'd have to go with a niche insurer as a first timer...but she couldn't recommend any of those).

So, I'm currently at a loss, and looking for any suggestions for either carriers/agents I may be able to call or what I might be saying that's turning everyone off?

Thanks in advance!

[Rick Baggenstoss]

I think the breaking the business structure down will help you achieve the 'vanilla' status AND provide you with layers of protection. You also need to compartmentalize the risk (for them and you) so it fits into a specific category of company.

For example.

1. Buying/Selling/Holding Entity (one or many companies with different ownership, JVs, etc.) - This company does marketing for purchases, holds and contracts for rehab on properties. (Property and some liability per entity with limited exposure e.g. <$500k to $1M.

2. GC/Rehab - This company is a service provider for managing the (re)construction of single family residences in your state. Contracting, coordination, payment, code compliance, reporting, and oversight of subs are primary duties. One employee, you. You can get project-based insurance and some over-arching.

3. Property Management - Management of 3rd party properties.

4. Holding Company - Overarching entity which invests in other companies and projects including the above. This is an added layer of protection when something doesn't fit in with the rest, eg. JVs with others, Hard Money, writing, blogging, company car, etc.

5. You/Your Family. Personal assets. Home, personal auto, umbrella.

Rick