In New York’s competitive construction industry, carrying the right liability coverage isn’t just recommended—it’s critical. Yet, for contractors managing multiple projects, affording General Liability (GL) and Excess Liability insurance premiums can strain your finances.
Annual premiums often climb well into six figures. That’s why many contractors use premium financing—a financial tool that enables you to pay your premium in installments while the finance company covers the full cost upfront.
When used wisely, premium financing helps maintain cash flow and keeps projects moving. But mismanaging it can result in canceled policies, steep penalties, and difficulties renewing coverage later on.
Below are 10 essential facts every New York contractor should understand before financing their insurance—along with expert strategies to lower your total cost.
10 Must-Know Tips for Financing Liability Policies as a Contractor
1. Premium Financing Is a Secured Loan
You’re not just deferring payment—you’re borrowing money. Your insurance policy becomes the collateral. If you default, the finance company can cancel the policy without the insurer needing to send further notice.
2. Expect a Down Payment
Most agreements require you to pay 15% to 25% upfront. For a $100,000 premium, you’ll need to provide $15,000–$25,000 out of pocket.
3. Rates Vary—and They Matter
Premium financing comes with interest, usually between 8% and 18% APR. Don’t be fooled by low monthly payments—calculate the full cost of the loan over the term.
4. One Missed Payment = Cancellation Risk
Skip a payment and you’ll likely receive a Notice of Intent to Cancel (NOIC). After a 10-day grace period, your policy can be terminated immediately, jeopardizing active job sites.
5. Late Fees Are Pricey
Many finance companies charge late fees of up to 5% of the missed monthly payment. On a $5,000 bill, that’s an additional $250 just for being late.
6. Refunds Go Back to the Finance Company
Cancel your policy early? The unearned premium doesn’t come to you—it’s returned to the lender, reducing your control over policy transitions.
7. You Can Bundle Policies for Efficiency
Contractors often bundle multiple coverages—GL, Excess, Auto, Inland Marine—under one finance plan. It simplifies payments and may reduce interest rates.
8. A Skilled Broker Can Improve Your Terms
Just like insurance policies, premium finance contracts can be shopped around. A knowledgeable broker can secure lower APRs and better structures for you.
9. Past Payment Issues Can Haunt You
Previous cancellations for non-payment may flag you as high-risk with carriers. This could result in higher future premiums or stricter payment requirements.
10. Financing Doesn’t Replace Budgeting
Premium financing helps cash flow, but it also adds fixed monthly obligations. Only finance what your business can realistically repay—even during slow periods.
Can You Reduce Interest Rates or Adjust Payments?
Yes—and proactive planning can save you thousands. Here’s how to optimize your premium financing:
Request a Delayed Fund Release
Ask your broker to negotiate a 20–25 day delay between when the paperwork is signed and when the finance company pays the insurer. Some lenders offer lower rates in exchange for this reduced exposure.
Avoid Late Fees at All Costs
Late payments are heavily penalized. A single slip-up can lead to fees, cancellations, and strained relationships with your lender and broker.
Know the Cancellation Timeline
If a payment is missed:
- The lender sends a Notice of Intent to Cancel.
- You usually get 10 days to pay.
- If no payment is received, cancellation is immediate.
- Insurers are not required to issue an additional notice.
Your operations could halt overnight—so always pay on time.
Leverage Your Business Profile to Negotiate
Good credit, a strong payment history, and business stability can help you secure:
- Lower interest rates
- Smaller down payments
- More flexible repayment options
Use your broker to advocate on your behalf.
Finance Strategically
You don’t have to finance everything. Focus on larger policies (GL, Excess) and consider paying smaller ones (like Inland Marine or Tools & Equipment) upfront to reduce finance charges.
Why New York Contractors Choose BGES Group
At BGES Group, we’re not just insurance brokers—we’re construction risk specialists. We help contractors across New York, New Jersey, and Connecticut structure smart, sustainable financing plans for:
- General Liability
- Excess/Umbrella Liability
- Workers’ Compensation
- Commercial Auto
- Inland Marine
- Contractor’s Equipment
- Environmental/Pollution Liability
- OCIP/CCIP Wrap-Up Programs
We also partner with top-tier premium finance companies to help you:
- Lock in competitive interest rates
- Secure flexible payment terms
- Align financing with your cash flow
- Prevent policy disruptions and project delays
Contact Us Today
Gary Wallach | BGES Group
📞 914-806-5853
📧 bgesgroup@gmail.com
🌐 www.bgesgroup.com
Final Thoughts
Premium financing isn’t just about spreading out payments—it’s a critical financial decision that affects your risk, cash flow, and operational continuity. Make sure you structure it with long-term success in mind.
Before you sign any premium finance agreement, call BGES Group—we’ll help you make the right move