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Choosing the Right Rating Structure for New York Contractors: Gross Receipts vs. Payroll and Subcontracted Costs

For New York contractors, securing a comprehensive General Liability (GL) policy is crucial to protect against potential liabilities and unforeseen risks on construction projects. One of the essential decisions contractors must make when obtaining insurance is choosing the appropriate rating structure for their policy. Two common methods include basing the cost on gross receipts or on payroll and subcontracted costs. We will explore the pros and cons of each approach and shed light on the role of BGES Group in guiding contractors to make the right choice.

The Significance of Rating Structure:

The rating structure defines how the cost of the General Liability policy is calculated. Contractors can opt for either gross receipts or payroll and subcontracted costs as the basis for determining their premium. Each method has unique implications for the contractor’s financials and level of coverage.

1. Gross Receipts as the Rating Basis:

Basing the GL policy cost on gross receipts means that the premium is calculated using the total revenue generated by the contractor’s business. This method is straightforward and easy to implement. However, it might not always provide an accurate representation of the contractor’s risk exposure.

The Impact of Increasing Construction Material Costs:

One significant concern with the gross receipts method is how it can lead to a policy cost that is “out of whack” when construction material costs increase during the policy period. As material prices fluctuate, the cost of projects may rise, potentially distorting the premium calculations and leading to inadequate coverage. In such cases, contractors might find themselves underinsured and facing financial hardships in the event of a claim.

2. Payroll and Subcontracted Costs as the Rating Basis:

Using payroll and subcontracted costs as the basis for rating the GL policy offers a more accurate reflection of a contractor’s exposure to risks. This method takes into account the labor costs and expenses associated with hiring subcontractors, providing a more realistic assessment of the potential liabilities.

The Role of BGES Group:

Recognizing the complexity of insurance decisions for New York contractors, BGES Group offers invaluable assistance in selecting the right rating structure. With their expertise in the construction industry and insurance landscape, they can guide contractors to make informed choices that align with their unique business needs.

Special Contractor Liability Programs:

BGES Group not only helps contractors choose the appropriate rating structure but also offers specialized contractor liability programs. These tailor-made programs cater to the specific risks and challenges faced by contractors, ensuring that they receive the most suitable coverage at competitive rates.

Leveraging a Vast Network of Insurance Companies:

Another advantage of partnering with BGES Group is their extensive network of 50+ insurance companies. This broad reach allows them to market contractors’ accounts to multiple insurers, increasing the likelihood of finding the most competitive and comprehensive policy.

Assistance in Policy Adjustment:

If a contractor finds that their current policy rating basis is not the best fit for their evolving business, BGES Group can step in to help make necessary changes. Adjusting the rating structure mid-term or at renewal ensures that the contractor remains adequately covered while adapting to industry dynamics.

Selecting the right rating structure for a General Liability policy is a critical decision that can significantly impact a New York contractor’s financial security and risk management. While gross receipts offer simplicity, it may lead to drastic cost increases during periods of rising construction material costs. Alternatively, basing the policy cost on payroll and subcontracted costs provides a more accurate representation of the contractor’s risk exposure. To navigate these choices and secure the best coverage, contractors can rely on the expertise and support of BGES Group, which not only assists in choosing the right rating structure but also offers specialized liability programs and access to a vast network of insurance companies. By partnering with BGES Group, New York contractors can safeguard their businesses and projects with confidence.

If you would like to speak with us call Gary Wallach at 914-806-5853 or click here to email or click here to visit our website.

BGES Group, located in Larchmont, N.Y. are New York Construction Insurance Specialists that represent 50+ companies and all the BEST general & umbrella liability programs!  We offer every coverage you need including property, builders risk, inland marine, general liability, umbrella liability, auto, bid & performance bonds, workers’ compensation, N.Y.S. disability and group health.  We are extremely responsive, responsible, trustworthy, fast, minimize your insurance headaches, we don’t charge ridiculous policy or service fees and when you call, text or email, whatever time of day, even weekends, we are ARE THERE to help YOU!

BGES Group are Workers’ Compensation Insurance Specialists for Tri-State Business Owners: Unhappy with your rates, company, being cancelled, losses causing difficulty getting coverage, in the middle of an audit dispute, payrolls misclassified, whatever your issue, we can help!  We have special programs for: Auto Service, Contractors (especially New York), Limousine Services, Logistic Companies, Manufacturers, Recyclers, Truckers, we can help ANY tri-state business owner.  We are considered “Preferred Agents” for this one program that if we can get you in, their pricing is excellent, offers long-term coverage stability and can cover multi-state operations. Program takes the hassle out of doing annual audits too.

In addition, we offer all personal insurance coverages including home, auto, boat, jewelry, fine arts, life, disability, health and long-term care.  When was the last time you got a complete check up for all your coverage needs?   We are extremely caring and would love the chance to help you with your personal insurance needs.

BGES Group is an insurance agency whose owner is very responsible, responsive, offers boutique, very personal service and is ALWAYS there when you need him most!

We know reading an article we post or getting an email is not the best way to consider working with someone.  If you are interested, go read our “Google Reviews” and see what people have to say about us!  That can give you the comfort level needed to contact us.

If you would like to speak with us call Gary Wallach at 914-806-5853 or click here to email or click here to visit our website.

Company: BGES Group, 216A Larchmont Acres West, Larchmont, NY 10538



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contractor liability policy – New York

contractor liability insurance – New York

Contractors Liability – Gross receipts or payroll/subcontractor costs

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