A little background before I ask my question.
I run a small, family contracting business in California. We've been in business for about 45 years now. Over the last 6-7 years, we were caught up in a few "class action" lawsuits. Now, because of the lawsuits, we're unable to get liability insurance. I've talked to numerous insurance brokers and even a few lawyers, and nobody can tell me what to do.
Does anybody here know of a solution to my problem? I know I'm not the only contractor out there with this problem.
never have been in that situation but I did know another shop that had it happen to them and his Insurance company sold him out and he was only able to get insurance by paying huge rates. the insurance companies would rather just pay them off then to go to court. Then they drop you . I would be currious when you were in class action suits for if you dont mind me asking?
Join the club.... I`m in san jose & for the past 4 years my lib. policy has been cancelled each year , My agent has to shop around for a new co. every year.They say they quit writting hvac contractors policies because of the libility.
My new policy say`s no new resid. construction covered, no lpg coverage.My new carrier says they will cover 1 new house a year for a $10,000.00 preium. There crazy////////
I called 4 different agents & they are trying to find me a new company, so far no luck.
"I would be currious when you were in class action suits for if you dont mind me asking?"
Back 10 years and before, our main business was new construction tract homes, condos and apartments. Most of the suits were "construction defect" type (where every trade gets sued) and one was on the old Consolidated attic furnaces. Anyway, I wouldn't do new construction tract work anymore even if there was decent money in it.
If I could even GET a $10,000 quote I might just consider it. So far, the only quote I can get is what they call "surplus market" coverage. It's basically a high risk policy and the premiums start at $25,000! Tough pill to swallow for a small business.
Thats what my main agent called it, surplus market. You can`t get any smaller than me, one man shop, thats me & i`m 63 years old and still doing it.This ca. insurance racket is getting rediculas,
P>S> I can`t spell worth a damn.
How does anyone operate out there?
I get 2 mil for less about a grand a year, good policy, complete operations, the whole bit.
If I can't get something resolved with an insurance company around here it generally takes one letter to the Vermont Banking and Insurance Board to get it straighten out.
I guess I just assumed that every State has some type of regulartory department to mediate insurance complaints.
Getting back to jnj's question. It seems like everyone in Califronia is moving to Idaho. That might be an option??? How about dissolving your corporation and start-up under a different veil??
The thing is every State has a different set of corporate rules and I sure as heck don't know what California's are.
Cal. is all screwed up. I didn`t read all my new policy & didn`t know i wasn`t covered for new resid. construction & lpg.Last month i started a new custom home with lpg. i got the underfloor all in & now i learn i`m not insured. I`m kind of at a loss what to do now.
2 mil for less than a grand? That's fantastic! All I can say is (and please don't take this the wrong way) stay out of California. This has got to be one of the most anti-business states of all.
Been there, done that. I've written letters to our state insurance commisioner, I even wrote to our governor (Arnold). All they do is refer me to brokers who handle "surplus market" insurance (high-risk & $$$). They're of little help.
As far as opening-up under a different name... I'm looking into all those possibilities right now. It's my understanding though, that as long as the principles are the same, it would make no difference. It would be like someone buying my business... you assume all liabilities past & present. Besides, it really turns my stomach to be forced to almost throw away 45 years of good will and name recognition. Another option I'm looking into is putting the business in my wife's name, but I've heard a few horror stories about that too.
Anyway, thanks to all for your replies.
The land of fruits and nuts
I am like Diceman as well. Its about $1500 here for me. For 2 mil. Operations and all.
I did get a little nervous this last renewal when the agent asked me a lot of questions abut the areas of the biz I am involved with. Once I got done answering the questions the agent says "good, you don't do boiler work or new residential construction". I asked why. He said those areas of our industry are all but being abandonded from being covered by any policy underwritten by most carriers, due to the civil suits brought against contractors in those areas.
Prior to my guy becoming an agent he did something with working with litigators for some big insurance corp for quite awhile, and said to me in the same conversation that, he wouldn't dare be a contractor in any trade these days.
He said it's chaos how the civil side of the courts is treating unfairly the small contractor. Frivilous suits being allowed to move forward through the courts and then during evidenciuary investigations, how the so called real experts speaking on behalf of the contractor as nuetral third party witness experts are inept and thats why were losing the cases.
It was pretty damn interesting talking to him. He said that, insurance companies are not afraid to fight for you, but if there is a trend that develops in an industry about an issue, whether its stupid, frivolous or whatever they use very blatant prejudice to not underwrite. They know the fights they can win basically.
It's because there's not a single place in Pitt or detroit worth 2 million. :D