I am looking for General Liability insurance for a start up remodeling company.?

Question

I will be the only employee. I have heard that I must have insurance and this is based on my payroll. If I pay a sub-contractor for work performed does he become my employee and am I liable for his actions on the job site? What does general liability insurance cover? What is a insurance audit?

Answer 1

There are many insurance types, for general one, it means, if you acciently break something at the client's house, then you are covered. There are some un-employment insurance, which means in case your employee is layoff, and they can get a pay while they are looking for a job.

For the subcontractor, I believe you can pay them by 1099 base (which means they aren't employee and you don't take out taxes for them)

It will be the best to get an insurance agent to explain all this to you to see if you need to be incorporated or you can just work for yourself to start with.

Answer 2

you may absolutely be liable for the subcontractor if YOU hire HIM... meaning you pay him directly. You can do one of 2 things, have the homeowner pay the sub directly or have the sub provide you with a certificate of insurance, naming you as additional insured. That way at least you are protected by his coverage also. General Liability (GL) covers many things including bodily injury and property damage. Basically it covers you when you or your crew damage someone else or their property.  An insurance audit is when a company reviews your books to assess if they charged you the correct premium.  Depending on your policy they should be looking for the following information:

1. Gross Sales

2. Payroll

3. Employee count

4. cost of subs

they will either charge you an AP (additional premium) or close the audit even based on their findings, in some cases if you overpaid they will apply it to next years premium. If you are in NY you can call 800-MrRates and ask for Jay, he can help.

Answer 3

OK, you can't buy this on line.   You need to see an agent.

If your subcontractor has not provided you with a certificate of insurance, showing HE has GL coverage, for the whole time period that your policy is active, he is rated as an employee, as, well, it's YOUR liability on the hook for any of your uninsured subs.  

General liability, well, for a start up, you're looking at a non-admitted carrier, so it is HIGHLY individualized.   You'll need to talk to the agent you buy it from, to see what is covered.

An audit.  Well, for GL and workers comp policies, it's rated based on either sales (for gl) or payroll (for gl & wc) for the coming year.  Obviously, it's a guess, as you can't know exactly what will happen for the coming year.  SO, after the year is over, the insurance company will come back and look at your books, to find out exactly what the sales and payroll figures were, and they will recalculate the premium they gave you at the beginning of the year, and adjust it - retroactively.

That's why it's SO important, when you're buying a commercial policy, not to look at the PREMIUM, but at the RATE.