Be a better buyer

There are ways to make a more informed decision when purchasing insurance

For the average roofing contractor, insurance is the third largest expense surpassed only by the costs of materials and labor. It is so significant it can affect your ability to be competitive and, in severe cases, lead ton business failure. Insurance companies rely on base rates developed by outside rating bodies that are segregated by industry—including the roofing industry—from which your company's final premium ultimately is calculated. How you manage and present your company can affect your net rates by 40 to 50 percent either favorably or unfavorably. To get the best coverage for your money, you need to learn how to be a better buyer of insurance.


Many things will affect how much you pay for insurance, and modifications are one of them. Premium modifications affecting your net rates fall into three categories:

  • Experience modification factors. These are calculated based on the loss experience of your company as compared with the average of all roofing contractors. The most significant of these is the workers' compensation modification, which is calculated by the National Council on Compensation Insurance or a state bureau that collects experience data from all insurance companies. This factor must be used by all insurance companies and can result in a 40 percent discount to a 30 percent surcharge in most states. In simple language, your past four years of experience as compared with expected losses for the industry produces a multiplier. More information about how the experience modification factor is calculated can be found at
  • Schedule credits: Most insurance companies file with the state the ability to apply "judgmental credits or debits" based on other risk factors. A positive example might be a credit for a great safety program. These credit swings are as much as plus or minus 25 percent and are used by insurance underwriters to arrive at the final price for coverages. You can ask your agent whether you are receiving any schedule pricing credits and, if not, how you may be able to earn them.
  • Package credits: These credits reward buyers who buy multiple lines of coverage.