For Brothers Strong, a remodeling firm in Houston, the difficulty began in January 2003, when its insurance carrier announced it was pulling out of the Texas market and canceled the company's general liability policy. Several other carriers also pulled out of Texas around the same time, leaving just a few willing to write new policies for remodeling contractors, and only at significantly higher premiums. "We felt our backs were against the wall," explains Michael Strong. "Since we had never had a claim against us and liability coverage is not required here, we thought we'd try going without it. That wasn't so easy." The company immediately lost one lucrative client who balked at the company's decision to remove its notice of insurance from the contract. Then Brothers Strong almost lost control of its office property when a balloon payment came due and the bank demanded proof of business insurance to resume financing. The company finally found a carrier willing to write a new policy in April. But the firm had to raise its deductible to $5,000 and absorb a 35% premium increase. That was on top of a 20% hike in its premium the year before.

Across the country, builders and remodelers have been reporting similar nightmares. Carolyn Nelson of New Spaces, a design-build remodeling firm in Minneapolis, reports that her company got off easy with a 30% increase in rates after its insurance carrier pulled out of Minnesota. Remodeler Jim McGrath of Acton, Mass., was forced to take a new...

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