Posts Tagged ‘Payment Insurance’

How To Prepare For A Non-Paying Project

On September 29, 2010        

September is National Preparedness Month, and since we’re now in the middle of the month, I thought it would be appropriate to post about what steps you can take to prepare for a non-paying project.

Payment problems and construction projects can go together like peas and carrots. Companies that do a great job of preparing for non-paying situations get paid more frequently, and avoid the consequences of a project gone wrong.

How can you prepare for a non-paying construction project? Here goes.

Send Your Notices To Protect Your Lien Rights

Every state has different preliminary notice requirements, and some states don’t require any notice. It’s very important to understand the notice requirements in your project’s state. If you don’t deliver the proper notices, you may forfeit your lien rights…and filing a lien is one of the most important things you can do to get paid.

If I’ve said it once, I’ve said it 1000 times. Send Your Preliminary Notices!

One terrific way to send your preliminary notices and manage the preliminary notice requirements of each state is to use a construction notice service like Zlien. Zlien is in the business of preparing and sending these notices, allowing you to outsource this tedious and very technical job to folks that do it everyday.

Don’t know which notices to send? You can use a construction notice and lien compliance manager like the LienPilot. You simply input the projects information (or upload them in bulk), and the LienPilot will display relevant notices required and their deadlines.

File Your Lien On Time

This is a no-brainer. You only have lien rights if you protect them (send your notices) and then timely file your claim. Every state has different lien deadlines, so get to know the deadlines related to your project.

It can be as short as 15-20 days, as long as 2 years and everything in-between. There’s really no rhyme or reason to the timelines, and if you’re working in multiple states (like material suppliers frequently do), the LienPilot may be an excellent tool for you. The LienPilot calculates the mechanic lien deadlines for your project.

Insure Against It

Finally, we mentioned “Payment Insurance” in past blog posts. This is a great product for folks who do a large number of projects each year with the value of each contract being fairly small (<$100k-$200k). The policy provides your company with coverage in the event you’re unpaid.

So, instead of spending thousands of dollars in legal fees chasing bad debt, you get paid by the insurer and go on your merry way. It may be a great fit for your company. Check out the providers of this product: Construction Indemnity Group.

This article was originally posted on Zlien’s topic-specific Construction Lien Blog.

Posted in:     Mechanics Lien  /  Tags: , , , , ,   /   Leave a comment

Did You Know…You Can Insure Against Non-Payment

On May 17, 2010        

Construction Indemnity offers a real revolutionary product for the construction industry: payment insurance. Yes, you’re reading this correctly. You can now purchase an insurance policy to protect your organization against non-paying projects.

Here’s the pitch: Getting paid is one of the biggest challenges to those in the construction industry. Construction Indemnity Group insures that your company is paid the money you’ve earned. When you’re not paid, you make a claim against your policy. Construction Indemnity spreads the risk across multiple contractors, and you assign them your lien and collection rights and let them do the hard (and expensive) work of collecting amounts due.

Their website sums up the policy’s offering and cost with this:

For around $1000 annually (plus cost and fees) with only $150 down and guaranteed payment plans, CIG can provide you $25,000 worth of coverage annually against non-payment by your customer.

This is a real neat product. And I think it fills a real serious need for those contractors and suppliers who perform work or provide materials on construction projects but only have a few thousand (or up to $25k) of outstanding debt on any single project.

As an attorney, I have potential clients approach me to help collect these types of debts all the time. The trouble is that the cost of collection and risk of non-collection is too high. These companies frequently walk away from the account and lose the money. Here at the construction law monitor, we have an entire section devoted to Collections laws and techniques, and we frequently discuss this practical burden to successfully collecting on a marginally small debt.

But just because the number is small when compared to the cost of collecting doesn’t mean its small to you or your company. To the contrary, they mean everything.

Construction Indemnity has a neat calculator on its website titled “See How Much Bad Debt is Costing You.” It’s eye-opening. Put in the amount of bad debt you have per year and your typical profit margin, and the site calculates the sales you need to replace your bad debt. Let’s take something small ($25k of bad debt), and a typical profit margin (5%), and get a dose of reality: You need $500,000 in sales to replace this bad debt.

Construction Indemnity lets you insure it for approximately $1,000.00 a year.

This is not to mention that policyholders are eligible for savings on certain industry services. Express Lien is proud to have a marketing relationship with Construction Indemnity Group, providing its policyholders a discount of at least 20% on all of our products and services. Policyholders also get a discount to Lien Law Online, which is a real neat online service providing folks with legal information about construction lien laws nationwide.

Get more information about Construction Indemnity Group here, or click here to submit an application.

This article was originally posted on Express Lien’s topic-specific Construction Lien Blog.

Posted in:     Collections, Insurance  /  Tags: , ,   /   Leave a comment