Like so many costs of doing business, insurance premiums have surged in recent years. Storms, inflation, lawsuits, and astronomical awards, plus state laws (a.k.a. the Scaffold Law) are all making New York the most expensive insurance market in the country, especially when it comes to construction. While you can’t control many of the factors driving costs, there are actions you can take to put your business in a better position to keep cost increases under control.

First, make safety part of your business and culture.

Not only can a formal, documented, and comprehensive safety program and a stellar safety record help you manage workers’ compensation premiums (which can help offset larger increases to commercial insurance), but they can also help you attract and retain talent that shares your safety-focus, and serve as additional selling points to potential clients.

If it’s an option, hire or engage a risk/safety manager to develop and execute a comprehensive safety program that encompasses everything from recruiting and hiring employees and vetting subcontractors (plus checking certificates of insurance and risk transfer agreements) to addressing safety in pre-construction planning, equipment maintenance, and work site protocols. A strategy may explore how technologies like drones, robotics, and wearables may mitigate loss while improving your risk profile.

Best practices to consider include creating worksite safety committees, where managers and employees meet regularly to review safety goals and performance and reinforce a safety-first culture; developing and communicating protocols for recognizing, reporting, and resolving potential safety issues immediately; starting each work shift by reviewing a key safety concept with employees; and regularly inspecting and maintaining equipment to ensure safe operation.

OSHA offers a number of resources that can support construction safety efforts, training, and communications, including the Focus Four (key safety areas for construction businesses to focus on); trenching and excavation; heat illness prevention; personal protective equipment; and more.

Second, evaluate your coverage needs and give yourself adequate time to negotiate terms and rates.

Start the process at least 90 days before a renewal. Gather data about any changes to your business (i.e., equipment acquired or sold, or a change in headcount) that may impact coverage. Also, bring documented proof of your safety program, activities, and results – your insurer may offer discounts when you demonstrate a commitment to safety and risk management. Prepare to speak to your loss history, especially if it is favorable.

If you have a longstanding relationship with an insurer that understands your business, commitment to safety, and track record, collaborate on opportunities and options for managing cost increases.

If you’re interested in shopping around, explore programs that may be available through professional affiliations, before moving ahead with any new market entrants, research rankings, customer experiences, customer service, and ability to cover losses before moving ahead. In all cases, make sure coverage will comply with contract commitments.

As you move ahead, explore whether an insurer offers discounts for paying in full upfront versus monthly, or for bundling policies. While it’s tempting to offset insurance premium increases with higher deductibles, lower coverage, and/or more exclusions, balance these considerations with what increased risks and exposure can mean to your business. Consider the pros and cons of creating a contingency fund to keep in reserve for covering higher deductibles rather than paying higher premiums.

While you focus on protecting your business and people with insurance and a safe work environment,  you can count on RBT CPAs to focus on your accounting, advisory, audit, and tax needs. Give us a call or send an email and let us know what you need. We would appreciate having the opportunity to show you how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.