Are you paying more for "insurance" but getting less and less coverage for your money every year? How many companies are still willing to even give a quote on a policy? Do you understand your coverage, how vulnerable you are, and what kind of risks you're still exposed to?

I paid for my liability insurance coverage for more than 10 years before I ever needed to use it, renewing my policies year after year and assuming I had the right coverage. That's when I found out that the first thing some insurance companies do when you need them is look for a way out. Call me naive, but I didn't know about exclusions. I figured my insurance agent had me covered since he knew my exposures as a home builder.

Times have changed. "Exodus" has become the insurance industry's theme song over the last five years as underwriters abandon residential markets, leaving states and contractors high and dry. It's gotten so bad that you feel lucky if you can get coverage at twice, triple, or even five times your past rates. Deductibles are increasing, and the list of exclusions seems to be getting longer than the items actually covered.

This is not to say that the insurance industry hasn't itself been challenged, in part because of major construction claims over construction defects, EIFS, and mold. More importantly though, the terrorist attacks of 9/11 and losses from a sagging economy have evaporated resources across the board.

In addition to placing the highest priority on maintaining quality control on your construction projects at every stage, every expert I've talked with or heard speak about construction defects gives the same advice to contractors: Document your work in the field at every phase of construction. First, documentation establishes the quality of your work on each project, especially if a problem arises, like a failed inspection that you remedy. Also, regular documentation of your fieldwork at all phases might help you establish your company's overall standard of quality, which could be used to support your position in a future action. A digital or cheap disposable camera should become part of your superintendent's tool kit.

In addition, remember that your subcontractors' insurance policies are in play. Your insurance coverage could be affected in an action by limitations that show up in your subcontractors' policies. You need to pre-qualify subs and evaluate their insurance policies before you start a project. That's always been a good idea, but now you may have to do this to qualify for insurance yourself.

The construction industry isn't giving up without a fight though, and states like California, Washington, Nevada, Florida, Arizona, Maryland, Virginia, and Texas have passed some form of construction defect laws that give builders the right to remedy defect complaints before they turn into lawsuits. In Colorado, homeowners must wait 75 days from when they notify a builder about a claimed defect before they can file a lawsuit. Builders have time to respond to and remedy the problem. In addition, the new Colorado law caps the amount of a defect claim at $250,000 including legal fees. The hope is that with pro-industry legislation in place, underwriters will return to the markets they abandoned. We'll see.

It's hard not to get angry over this trend no matter what the cause. Running a construction company is hard. Making money at it is harder. But trying to do both without the security of insurance coverage is asking too much?especially since it continues to cost more to secure less coverage.

It used to be that "insurance fraud" referred to dishonest people making false claims to steal money from insurance companies. Now I just think it refers to insurance companies that are still pretending to protect us.