Masonry Magazine October 1967 Page. 23
insurance for contractors
SECOND EDITION
Revised to include the new policy forms and entirely new material on:
• Contract Bonds
• Architects' and Engineers' Professional Liability
• Contractors' Equipment Floaters
• Builders' Risk Insurance
• Employee Benefit Liability
• Uniform Hold-Harmless Clauses
• Composite Rating
by
Walter T. Derk
Assistant Vice President
FRED. S. JAMES & Co.
Insurance Brokers and Consultants
Since 1858
PART XII
Composite Rating and Certificates of Insurance are covered in this installment. The final article will appear next month.
COMPOSITE RATING
Instead of paying General Liability premiums geared to payroll, number of elevators, amount of sublet work, gross receipts and contract cost, some contractors (and others) are billed a composite rate for all five divisions of coverage combined. It seems worthwhile now to dispel some of the mystery about this basically simple technique, since it is often misunderstood.
In theory, the insurance carrier will first arrive at a premium quotation by individually rating each division of coverage, using payrolls, receipts, etc. as measures of exposure, to produce dollars of premium required to write the coverage. This dollar quotation remains constant, but if the insured prefers to simplify bookkeeping and gear the policy cost to payroll or receipts, it can be arranged something as follows:
Example of Usual Rating Method
Coverage
Premium Bases
Annual Premium Quoted
B.I.
I Operations-Premises $200,000 payroll $1,000
P.D. $500
II Elevator Two elevators 100
III Protective $50,000 sublet 10
IV Completed Operations $600,000 receipts 175
V Blanket Contractual $600,000 contracts 200
Total $2,200