Why we told a roofer not to take the cheaper quote
The lower quote excluded the claims roofers file most. Here's how we read it, and what we recommended instead.
The numbers
The situation
A residential roofing contractor with about $8 million in annual sales came to renewal in the fall. Most of the work is re-roofing homes three stories and under, with some commercial roofing and a share of each job done by subcontractors.
The account had some claims history, and that narrowed the market. Several carriers declined to quote. The ones that did asked for current loss runs and an inspection, which is normal for a roofing account with claims.
Where we took it
We sent the renewal to 13 carriers. Two offered full terms on both the general liability and the excess liability: the current carrier, and one other. Two more gave rough price indications only, three declined, and the rest were still pending when we made our recommendation.
The catch in the cheaper quote
On paper, the other carrier's general liability was about $900 cheaper. Then we read the exclusions.
That policy excluded water damage through an open roof, and losses caused by torches and heating equipment. For a roofer, those aren't edge cases. A tear-off in Western Washington weather can turn a dry interior into a water claim in an afternoon, and hot work on low-slope roofs is part of the job. A policy that excludes both leaves out the claims roofers file most.
In fairness, the other option was better in two places: a lower deductible on claims involving uninsured subcontractors, and broader additional insured wording. Neither outweighed the exclusion.
What we recommended
We recommended renewing with the current carrier. The renewal kept the same limits and the same deductible as the year before, on the same coverage form, so there were no new gaps to discover in the middle of a claim.
It also cost about $7,500 less than the year before.
And the "cheaper" quote wasn't even cheaper. Once the excess policy was added to both options, that package actually cost nearly $1,500 more — the lower general liability price disappeared the moment you looked at the whole program.
Before and after
| Last year | Renewal we recommended | Cheaper general liability option | |
|---|---|---|---|
| Total yearly cost (general liability + $2M excess) | About $132,000 | About $124,500 | About $126,000 |
| General liability limits | $1M / $2M / $2M | $1M / $2M / $2M | $1M / $2M / $2M |
| Deductible | $5,000 | $5,000 | $5,000, including defense costs |
| Water through an open roof, torch and heat losses | Covered | Covered | Excluded |
The general liability premium is a deposit, adjusted at year-end audit on actual sales.
The follow-through
Before binding, the owner had two good questions. The first was what the policy's "continuous or progressive damage" wording means. In plain terms, it targets damage that started before the policy began and kept spreading. It doesn't target a leak from work done during the policy. The second was about remodel work: siding, windows and skylights done as part of a re-roof, and standalone decks and kitchens.
We took both questions to the underwriter. Work done as part of a roofing job stays under roofing. Standalone remodel work is recognized under its own classifications, which were added to the policy at no change in premium. The client gave the okay to bind within minutes of getting the final terms, and the renewal took effect on schedule with no gap in coverage.
What it means for your renewal
The lowest premium is only a good deal if the policy covers the work you do every day. Before we recommend a carrier, we read every exclusion against your operations and tell you what we found, including where the other option is better.
Want us to review your renewal?
Results depend on each account's operations, loss history and the market at renewal. Past results don't predict future premiums. Figures are rounded.
SmartInsured Inc. is a licensed insurance agency in Washington State, License #1009534.