Home improvement contractors and physicians have two things in common: Trial lawyers love them, and companies writing liability insurance policies shun them.

For the past five years, contractors around the country have seen liability premiums go up — in many cases, way up — while the coverage that money buys has withered.

Take Larry Eiteljorg. “Four or five years ago, I was paying something like $20,000 a year for liability insurance,” says the president of Century One Builders, Phoenix. Now, he says, it's more like $100,000, and that's actually $13,000 less than last year.

In Florida, Steven Field, president of Invincible Associates, also pays some $100,000 annually for business insurance, the vast majority of it for liability. In recent years, his deductible has ballooned to $10,000 per job, “and our average job is $6,000, so we're really only insuring against catastrophe,” he says. “In effect, we're self insuring.”

Cover For Me

Those are typical terms for contractors fortunate enough to have found an insurance company willing to cover them. That in itself has gotten tougher.

“We've seen a mass exodus of insurance carriers that were once ready, able, and competitive to provide insurance,” says Ed Dresselhuys, vice president of Acordia, in Chicago, the fifth largest brokerage in the United States and a subsidiary of Wells Fargo. “They don't want to write this type of insurance.” With premiums rising and insurers running for the hills, “there's certainly a crisis in the general liability marketplace for contractors, whether new construction or remodeling, as it relates to residential,” he adds.

If this crisis hasn't hit you yet, insurance agents, brokers, and executives say, it likely will at some point. In Connecticut, for example, the premium for general liability insurance for Tri-State Remodeling, a window, siding, and gutter protection company in Branford, “almost tripled two years ago,” says Brad Pompilli, president. That was also when he first encountered trouble finding an insurer. “Until then we had [companies] knocking at the door,” he says.

But the wave has yet to hit Dixie HomeCrafters in Atlanta, according to general counsel Gary Hooper, who says that the company has not seen a sharp rise in premiums or a significant cut in coverage.

Nor has it hit Ken Greene, president of St. Clair Corp., St. Louis. “I won't know if it will be a problem until I get my renewal in April,” he says.

But in Toledo, Ohio, liability insurance for The Basement Experts “has more than doubled by quite a bit, dollar for dollar, in the last five years,” says president Jim Quigley.