INSURANCE IS A COST LINE. MOST SUBS PUT IT IN THE WRONG PLACE.
Insurance is one of the three biggest non-labor cost lines at most subcontractors and the most commonly misplaced. Workers' comp belongs in the burdened labor rate by class code, not in overhead. General liability, priced on payroll or receipts, behaves like a variable job cost and should flow into the bid base. Equipment floaters belong in the per machine cost basis, and auto splits between job and overhead by use. Lump it all into one overhead bucket and your overhead rate looks bloated while your labor and equipment rates look cheap, so you bid labor-heavy work too low and wonder why insurance-heavy years lose money.
You don't just pay insurance, you allocate it, and the allocation decides whether your bids tell the truth. Getting it right pays in three places at once. The overhead rate drops to its honest level, so bids get competitive where you were padding. Labor and equipment rates rise to their honest level, so the silent losses on labor-heavy and iron-heavy work stop. And insurance cost per trade and per machine becomes visible, which is the number you need when the renewal quote comes in and the broker asks what changed. One allocation exercise, three pricing corrections.
WHAT IT MEANS.
Insurance allocation is the decision about which cost bucket each policy belongs in: workers' comp into the burdened labor rate, general liability into the bid base, equipment floaters into the per machine cost basis, and auto split between job and overhead by use.
The test for any policy is simple. If the premium scales with work performed, it's a cost of the work and belongs priced into the work. If the premium exists whether or not you build anything this month, it's overhead. Almost every mistake in this area comes from skipping that one question and dropping the whole insurance bill into a single line.
WHAT ONE OVERHEAD BUCKET COSTS YOU.
Workers' comp in overhead underprices every labor-heavy bid
Comp is priced per $100 of payroll by class code, so it scales with labor hours. A concrete finisher at a comp rate above 10 percent carries a very different burdened cost than office staff under 1 percent. Subs who park comp in overhead underprice every labor-heavy bid by the comp rate, and on field-heavy trades that number is the entire net margin.
General liability never reaches the bid
GL premiums are computed on payroll or gross receipts, which means every dollar of work you win carries a GL cost with it. A sub doing $5M at a 1.5 percent effective GL load who never bids it donates $75K a year to the GCs. The premium is real either way. The only open question is whether the customer paid for it.
A machine looks cheap because its insurance lives somewhere else
Equipment floaters and inland marine premiums belong in each machine's cost basis alongside ownership duration, replacement cost, maintenance, registration, and insurance. When the premium sits in overhead instead, the daily rate the job gets charged is too low. A machine that looks cheap for that reason is a machine getting deployed at a loss.
The mod and the audit get absorbed instead of managed
The experience modification rate multiplies your comp premium directly, so a 1.3 mod pays 30 percent more than a 1.0 for identical payroll, and most contractors learn that at renewal rather than pricing it today. Premium audits work the same way. GL and comp are billed on estimated payroll and trued up after year end, so a growth year produces a five figure audit invoice for work already billed at the old rates.
WHAT IT LOOKS LIKE IN DOLLARS.
A $4.9M concrete sub carried a 5 percent book overhead rate, partly because costs like insurance were scattered into the wrong buckets. The real number was closer to 12 percent. Correcting the rate structure so every cost sat in its true home was the foundation for the same company netting $1.1M the following year.
A $6.7M civil contractor's 30 percent overhead included costs that belonged in equipment and labor rates, along with genuine bloat that only became visible once the allocation was honest. Cutting to 17 percent paid off a maxed $348K line in 60 days. You can't cut what you can't see, and misallocated insurance hides in both directions.
As an all-in load, insurance commonly runs 3 to 8 percent of revenue for commercial subs, but the range is driven so hard by trade, class codes, mod, and state that the structure counts for more than the benchmark. The four numbers worth knowing cold are your comp rate per class code, your EMR and what it's costing above a 1.0, your effective GL rate on the basis your policy uses, and your per machine insurance cost.
Comp rates change at renewal, the mod changes annually, and payroll mix moves constantly. SPM recalculates burdened labor rates with comp included by class code every quarter, and those rates flow straight into estimating. The audit true-up gets accrued monthly, so the year end invoice confirms a number that's already on the books.
WHERE EACH POLICY BELONGS.
Comp is a cost of an hour worked rather than a cost of having a company, so it belongs in the fully burdened labor rate by class code. That means a separate burdened rate for a finisher at a double digit comp rate and for office staff under 1 percent, not one blended number covering both. Once comp is in the rate, a labor-heavy bid prices at what the labor really costs.
Convert the annual GL premium to a rate, either a percent of labor or a percent of revenue, matching how your policy is rated, then apply that rate in the bid build-up. The policy minimum stays in overhead, because that piece exists whether or not you build anything. Everything above the minimum scales with the work and gets priced with the work.
Equipment floaters and inland marine premiums belong in each machine's cost basis, flowing into the daily and monthly rates jobs get charged. Auto splits by use: trucks serving jobs go into job cost or equipment rates, and office vehicles go into overhead. That split is what makes the per machine numbers usable when you're deciding which iron to keep and which to sell.
The mod belongs in your burdened rates today rather than being discovered at renewal, and the audit true-up gets forecast as a liability all year with current real rates priced into current bids. The audit should confirm your accrual instead of ambushing your cash. An annual mod review catches the clerical errors, and return-to-work programs plus fast claim closure cover the operational side, since frequency hurts the mod more than severity does.
After proper allocation, what genuinely remains in overhead is policy minimums, office contents and cyber, umbrella coverage above the operating policies, professional liability where it's carried, and the office-use share of auto. That number is real overhead, because it exists whether or not you build anything this month. Everything else moved to where the work is.
Concrete carries some of the highest comp class rates in commercial work, since finishing, forming, and flatwork codes routinely run from high single digits to double digits per $100 of payroll, and on a labor-heavy bid comp alone can exceed the net margin. Civil is an equipment story, where 30 machines and a truck fleet carry a load that belongs machine by machine in the cost basis. Electrical carries lower comp rates than the structural trades but heavier GL exposure on energized work, plus GC-driven additional insured and umbrella requirements that add real premium per contract, and those contract-driven costs are job costs. Multi-site erosion work spreads auto and equipment exposure across dozens of small sites, plus pollution liability where it's carried, so per site costing without a per site insurance load shows phantom margins on the sites that drive the claims and the miles.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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