Growth in a roofing business shows up in the contracts and the insurance file before it shows up on the roof. Commercial work brings certificates, more crews raise payroll, a storm job can cross a state line, and a new service line can change classification. This post covers that insurance and contract side, with no statistics.
For the beginning of the journey, read how to start a roofing business. For the Small Business Administration’s own growth resources, its grow your business section covers funding, new locations and local counseling.
Growth is a paperwork event first
A job that is bigger, more commercial or further away can come with more documents attached. Someone can ask for a certificate, a limit, an endorsement or a bond before the first crew is mobilized. An owner who has already talked to an agent can answer quickly; one who has not may sign terms the policy does not meet.
The sections below take each kind of growth in turn, from the insurance and contract side only. Nothing here is a growth playbook for sales or marketing, and nothing replaces your attorney’s review of a contract.
From residential to commercial: prequalification and certificates
Commercial and general-contractor work can arrive with requirements written into the bid or subcontract. Our post on what insurance GCs require from roofing subs covers the documents a general contractor can ask a roofing sub for. Read those requirements before you bid, not after you win.
The commercial and industrial roofing page describes how we place coverage for that work. The point for a growing owner is simple: your current policy was bought for the work you did last year. Ask your agent whether it fits the contracts you want next year.
The limits and wording a contract imposes
Contracts can specify limits and require that the customer or general contractor be added to your policy. Additional insured for roofing contractors explains the endorsements that come up in those clauses, and umbrella and excess for roofing contractors explains the layer owners use when a contract asks for more than the primary policy provides.
The discipline is to compare the contract with the policy line by line before signing. Where they differ, ask your agent to close the gap or negotiate the clause with your attorney, and do it before the work starts. The general liability page explains the base coverage the rest of the stack sits on.
Reading the contract before you grow into it
Before you sign, put the contract beside the policy and compare these items: the limits the contract names, whether it requires the customer or general contractor to be an additional insured, the proof of workers’ compensation it asks for, when certificates are due, and any clause that shifts risk to you through indemnity or a waiver. Your agent can tell you what the policy does on each; your attorney can tell you what the clause does.
Keep a short file of the contracts you have signed and the certificates you issued against them. When a customer or a general contractor asks a year later what was in force, you can answer from the file instead of from memory.
Adding crews: payroll, classification and audit
Workers’ compensation premium is built from payroll. Texas’s insurance department describes the sequence: each employee’s payroll is assigned to the appropriate classification, the total payroll for each classification is multiplied by the company’s rate, and the classification premiums are added. More crews means more payroll, which means more premium, and the estimate you gave at the start of the policy is only an estimate.
California’s insurance department explains how that estimate is settled: the final premium cannot be calculated until the policy term is over and payroll records have been audited. If payroll has gone up from the estimate, the employer owes additional premium. A growing roofer can keep the estimate realistic by reporting growth to the agent during the term, so the audit is less of a surprise. How roofing workers’ comp rates are built walks the whole sequence, and hiring and retaining roofing crews covers the staffing side.
Storm surges and temporary crews
A storm can mean fast growth: temporary crews, subcontractors and sometimes a job in a state where you have not worked. The insurance questions are the same as for any growth, only compressed. Are temporary or subcontracted workers covered under your policy or required to carry their own? How will their payroll be treated at audit? Does the state where the job sits have its own workers’ compensation rule?
That last question matters because the rules differ by state. Roofing workers’ comp by state compares California, Illinois, Texas and the state-fund states. Ask your agent before the crews drive over, not after the first injury.
Real-World Scenario: A residential roofer wins its first commercial re-roof from a general contractor. The subcontract asks for a certificate naming the general contractor, specific coverage wording and proof of workers’ compensation, all before mobilization. The owner has already walked the requirements with an agent, so the certificate goes out the same week. Halfway through the job the owner adds another crew to hold the schedule and tells the agent that day, so the payroll estimate is current when the audit arrives. Nothing about the roofing changed; the paperwork was ready for it.
Bonding and funding
Some commercial and public work calls for more than insurance. The Small Business Administration says many public and private contracts require surety bonds, which help small businesses win contracts by providing the customer with a guarantee that the work will be completed. The SBA also says it guarantees certain surety bonds so that companies can offer bonds to small businesses that might not meet the criteria of other sureties.
A bond is a guarantee to the customer that the work will be completed, so treat bonding as a separate conversation with a surety. The SBA’s grow-your-business page also says to prepare a business case and financial statements when seeking funding, and gives construction as an example of a cyclical business that might use funding to get through slow periods. For a deeper look at funding, use the SBA’s own pages. They say to prepare financial statements that show how the business has grown, by reporting revenue, expenses and profit over time, and to review your business credit file for accuracy before sharing it. The insurance file belongs in the same folder: current certificates, loss runs and the payroll records worth having ready if an underwriter or surety asks.
Growing by acquisition
Some owners grow by buying another roofing company instead of adding crews. The SBA’s grow-your-business page lists merging and acquiring a business among its topics. From the insurance side, the question is what happens to the acquired company’s workers’ compensation experience. NCCI’s guide says that when ownership changes, the employer must notify the insurance provider in writing within a set period, that recalculation of modifications may be required, and that a change in ownership can affect the use of an employer’s experience.
Washington’s state fund takes a similar line from its side: when an employer buys an existing business and continues the same operations, the existing experience rating is in most cases transferred to the new owner. Either way, bring your agent into the deal before it closes. The sale side of the same question is in how to sell a roofing business.
Adding specialty lines
New service lines change the work and sometimes the classification. Washington’s Department of Labor and Industries guide says that if the nature of the business changes, a change in risk classification may be required, and gives the example of a painting contractor that begins doing drywall work, which would need a new classification. The principle for a roofer is to tell the insurer when the work changes.
The services we cover include residential roofing, commercial and industrial roofing and specialty metal and tile roofing. If you are adding one of them, ask how the policy treats it before the first job.
Grow with your agent in the loop
The checklist is short. Before a commercial bid, read the insurance and bonding requirements. Before adding crews, update the payroll estimate and ask about classification. Before a job in another state, ask what that state requires. Before adding a service line, ask how it is classified and covered. Each of these is a phone call to make before the move.
When you are ready to talk through your own plans, start a quote and tell us where the business is headed, or read the workers’ compensation page for how that coverage is built.