How Home Contractors Can Protect Themselves From Financial Liability

Construction worker putting the asphalt roofing (shingles) with nail gun on a new frame houseHome contract work can be a great way to build a business or make money on the side, but it also comes with certain risks. Clients can hold even small errors against you, so it’s important that you safeguard yourself fully. Otherwise, your business could take a significant financial hit.

“You have to protect yourself, because no one else will,”Michael Stone writes in Construction Programs and Results. “This means on every job, no matter how nice those clients are. You’ll never be 100% protected, but there are some things you can do to protect yourself and your business from a dishonest client. When you take these steps, your honest clients will appreciate your professionalism.”

This guide will help you learn your risks and take measures to protect your assets.

What are liability risks associated with home contract work?

Since over 98% of privately owned properties are in permit-issuing zones, many people will hire professional contractors to take care of logistics and remodeling. This can be a highly lucrative opportunity for you, as long as you are aware of any risks. These sources of liability include:

    • Property damage
    • Personal injury
    • Accidents
    • Faulty workmanship
    • Product damages

If you fail to be insured or protected by contract, you could leave yourself vulnerable to lawsuits.

How can workers protect themselves?

By taking the following steps, you can keep your assets protected and profit from a job without incident.

    • Check your insurance coverage. There’s a reason why 85% of worker’s comp claims are due to slips on slick floors — accidents to happen. This is why it’s important to have thorough contractor liability insurance coverage. Then, if the homeowner is injured because of a wobble cabinet or other incident, you are covered.
    • Write a thorough contract. Draft a contract with the terms of the job and have a lawyer look it over. This can prevent the client from suing you over certain incidents and lying about liability.
    • Take photos of the process. Document your work process before, during, and after completion. This will give you and your lawyer something to reference in the event of a lawsuit.

These images may be the evidence you need to prove that you took necessary safety measures.
Above all, be sure to communicate these details with the homeowner and check their coverage as well. This way, they will know that you are handling risk professionally. By taking the above steps and adjusting your coverage as your business grows, you can safeguard your assets and build a strong financial future for your company.

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