As remodelers, one of the biggest issues we face is insurance. Insurances of all types eat away at our profits one chunk at a time. Some of the smallest remodeling companies opt to not deal with things like workers’ compensation and liability insurance. And, of course, by doing that, those remodelers can keep their prices low.
Others find it too risky to not carry workers’ comp and liability insurance, and we trudge through with the paperwork and financial implications of staying legal. Sometimes it feels like we can’t compete with the smaller remodeler who has no overhead because cents speak louder than sense.
With such large projects and spending, our potential client is blinded by the appeal of saving thousands of dollars. Our responsibility is to educate homeowners about their exposure if they opt to gamble with an uninsured contractor.
Watching the Details
Like our clients, when we first sign a contract, we are quite careful to read every line and question what is and is not covered. But in the case of insurance, once the policy is in place, it’s easy to let slip the maintenance part of being a policy holder; I’m referring specifically to audits.
Once a year, you have a workers’ comp and liability insurance audit done by your carrier(s). Once the audit is completed and the final statement arrives, many business owners accept the results without even checking them. Sometimes it’s because the numbers feel right, or the amount owed doesn’t look as bad as you have seen in the past, or you’re just thrilled you received a credit instead of a bill. Or perhaps you are just too busy and the effort to debate the audit is just overwhelming. Regardless of the reason, most of us pay the bill and move on.
If I told you there might be $100 laying in the street and you could have it if you found it, would you get up and check to see if the money really was there? I ask because that is essentially what we are doing every time we don’t dig for more information regarding our insurance audits.
Getting a Report
The insurance companies don’t automatically send you a detailed report. Why would they want to make it easy for you to double-check their work? You have to request this report, and you should request it as soon as the statement arrives. Only after you double-check your numbers against theirs will you know for sure if there is an error in their calculations.
Insurance companies don’t automatically send a detailed report. Why would they want to make it easy for you to double-check their work?
The act of double-checking someone’s work takes only a few minutes, and the pay-off may be well worth the time. If you need more motivation, setup a monetary rewards incentive—it doesn’t have to be something official; it can be gift of appreciation for hard work, but nothing motivates us like money.
If you have an employee who takes care of your office paperwork, reward them with 25% of the funds they recover for the company. As the owner of a small business, if you do your office paperwork, you should reward yourself the same. You’ll find that you and your staff are now on the hunt for financial leaks and drains on your company.
Hopefully with the newfound cash you’ll be able to be freer with your estimates and feel confident when you enter a price war with an uninsured competitor.