UMBRELLA LIABILITY: WHAT IT COSTS AND WHICH JOBS IT OPENS.
The umbrella or excess policy does not replace the general liability policy. It is written above it, and the carrier requires the underlying policies to be in force at stated limits. General contractors and owners write a required total limit into the subcontract, often $2M, $5M or more depending on the trade and the size of the job, so the umbrella becomes a cost of getting the work. If the contract asks for more than the contractor holds, the extra layer is a premium that has to go into the bid, and it has to be bound before the contractor can start or be paid.
Umbrella premium looks like a small line on the insurance schedule until a contract asks for a higher limit. Then it decides whether the bid is priced right and whether the crew mobilizes on the date promised. This page explains what the policy does, why contracts require it, how it is priced, and what it does to a bid. SPM does not place coverage. A licensed insurance broker does, and the broker is who answers the coverage questions.
WHAT IT MEANS.
Umbrella and excess liability are policies that add limits above a contractor's underlying general liability, commercial auto and employers liability policies, so a large claim has more money behind it once the underlying limits are used up.
Policy wording, carrier rules and subcontract terms differ, and state law differs on what a contract can require. This page describes how the money works. The policy and the subcontract in front of you decide the answer for your company, and the contractor's broker and, where needed, a construction attorney should read them.
HOW THE LIMITS ARE BUILT.
What an umbrella does in plain terms
A general liability policy has a limit for each occurrence. A serious injury or a large property damage claim can cost more than that limit. An umbrella or excess policy adds more limit above it. When the claim uses up the underlying limit, the umbrella or excess carrier pays the next dollars up to its own limit. It is extra limit, bought in layers, and it is not a second, separate set of coverage for small claims.
The underlying policies come with it
Umbrella carriers list the underlying policies and the limits they must hold, usually general liability, commercial auto and employers liability. One large carrier's published construction umbrella program, for example, lists $2M per occurrence and $4M aggregate on general liability and $1M each on auto and employers liability. Carriers vary, so the number is an example of how this works and not a standard. If the contractor lets an underlying policy lapse or holds less than the schedule says, the umbrella is written to respond as though the required limit were in place, and the contractor pays the difference out of pocket.
Why general contractors and owners write the limit into the subcontract
A general contractor is often brought into the claim when a subcontractor's work hurts someone, and the owner is behind the general contractor. They want more money behind the subcontractor's policy than a single general liability limit provides. Published subcontract insurance forms from general contractors step the required limit up by trade and by contract size: for example, a base umbrella of $2M for most subcontractors, $5M for certain trades, and a higher limit when the subcontract passes a stated dollar amount. A required limit can usually be met with a combination of general liability and umbrella or excess limits, which is a question for the broker.
Umbrella versus excess, and the word follow form
In the usual description, an excess policy follows the underlying policy and copies its terms, so it adds limit and nothing else. An umbrella can also cover some things the underlying policy does not, subject to its own terms and a self-insured retention that the contractor pays first. A policy sold as an umbrella is sometimes written to follow the underlying form too, so the label on the declarations page does not settle it. Many subcontracts require the umbrella or excess to follow form and to be at least as broad as the underlying policy. The broker reads the actual policy form and tells the contractor what it does.
Completed operations and additional insureds
A subcontract usually requires the general contractor, and often the owner, to be added as additional insureds. Ongoing operations and completed operations are covered by separate endorsements, commonly the ISO forms CG 20 10 and CG 20 37, and many subcontracts ask for both. Some forms also ask for the umbrella to cover the additional insureds and to respond after the primary limits are used up. Completed operations coverage has to last for a period after the job is done, and the contract sets the period. Sample forms from general contractors ask for anywhere from three years to ten, and wrap-up programs can ask for ten. State law sets time limits for construction defect claims, and the states differ. A requirement that outlasts the policy term means the contractor has to keep buying the coverage after the work is finished.
How the premium is priced and why underlying changes move it
Carriers and brokers list the same factors: claims history, the type of operations, payroll and revenue, how many vehicles the contractor operates and what kind, use of subcontractors, and the limits on the underlying policies. No simple formula applies across carriers, and SPM does not publish a rate because a rate from the wrong carrier misleads. What helps in planning is the direction of the change. A claim on the general liability or auto policy changes the underlying record the umbrella carrier reads. A change in underlying limits, a new vehicle count, or a change in payroll or revenue can change the umbrella quote or the carrier's willingness to quote. Layers above the first one are usually priced lower per dollar of limit than the first, according to broker commentary, but the price still has to be quoted.
How the requirement meets prequalification and the bid
A general contractor that prequalifies subcontractors often asks for the insurance certificate, the experience mod and the financial statements together. See the prequalification page and the bonding requirements page for the financial side of that packet. The insurance requirement is also written into the subcontract, and many subcontracts make a certificate showing the required limits a condition of starting work or of being paid. A contractor that finds a higher umbrella requirement after the award has to buy the layer on the general contractor's timeline, and the cost goes into a bid that is already priced.
WHAT IT LOOKS LIKE IN DOLLARS.
Take a $1.2M subcontract with an 8 percent target net margin, which is $96,000. The contract requires $5M of umbrella limit and the contractor holds $2M. Suppose the extra $3M layer costs $10,000 a year and the carrier wants the underlying general liability limit raised, which adds $6,000 a year. All inputs are round and invented. The added cost is $16,000, which is 1.33 percent of the bid and about 17 percent of the $96,000 target profit. If the cost was not in the bid, the job earns $80,000, not $96,000.
Using the same example, say annual revenue is $6M. If the contractor buys the layer for every job, $10,000 is 0.17 percent of revenue and belongs in overhead, or about $2,000 on this $1.2M job. If the layer is bought only because of this contract, the job pays the full $10,000 plus the $6,000. Which one is correct depends on how many jobs will need the higher limit, and that decides how the bid and the overhead rate are built.
The notice to proceed is two weeks out. The broker needs loss history reports and an application to ask the umbrella market for a $5M limit, and the quote and binding take three weeks in this example. The certificate is due before the crew mobilizes. The start moves at least one week, and a one-week delay on a job with a crew already scheduled adds cost the bid did not include. Real quote times vary by carrier and broker, so ask the broker for the timing before the bid is due.
WHAT WE CHANGE.
SPM asks for the insurance section of every bid package and writes the required limits, the completed operations period and the additional insured wording next to the contractor's current policies. Any difference goes to the broker before the bid is due, so the price in the bid already holds the cost.
Insurance is part of overhead, and a layer bought for one contract belongs in that job's cost. SPM decides with the owner which jobs need the higher limit and builds the premium into the overhead rate or the job budget. See the contractor insurance cost page for how insurance flows into the rate.
The umbrella depends on the underlying policies holding their stated limits, so SPM keeps one schedule with every policy, limit, renewal date and premium. Before the contractor changes a general liability or auto limit, the broker checks what that does to the umbrella.
A licensed broker places the coverage. SPM collects the questions a general contractor asks, such as the required limit, the completed operations period and the additional insured forms, so the broker can answer them for each bid. The financial side of the packet, including the statements and the work in progress schedule, goes in the same folder.
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. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
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. The onboarding fee is right here in the table.
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 and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
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 books, the job costing, and the software. No payroll.
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