General Liability Premium Determination

When an insurance agent gives you a quote, your estimated premium is determines by the following factors:

1. Owner(s) ~ A rate is applied per $1000 of payroll for your owners. Each owner will be classified according to his work description. The owner(s) payroll is an assumed amount per state insurance guidlines whether he makes more or less. For example, most states require an assumed payroll for owners in the $25,000 range.
2. Other Employees~ A rate is applied per $1000 of payroll for your other employees (W-2) that is broken out per the appropriate work classification.
3. Uninsured Subs (If Any)~ A rate is applied per $1000 paid for labor to uninsured subs based on the appropriate work classification.
4. Insured Subs (If any) ~ A rate is applied per $1000 of amounts paid for labor and material to insured subs. Many contractors are surprised that there is a charge for using an insured sub under General Liability. The reason is that most lawsuits will name both the contractor that was involved as well as the subcontractor. The contractor’s insurance company must spend money hiring attorneys, etc. to prove that the problem was the fault of the subcontractor. As a result, a premium charge must be made to offset this expense.
5. Land Acreage~ For homebuilders that develop land, a separate charge is made for the acreage of land that is held as either Vacant Land or Real Estate Development Property (land that has been subdivided for development.