Many contractors grow their businesses steadily year after year. They develop good reputations and generate consistent profits. However, contractors face a variety of business risks. If you aren’t properly insured, some types of business risks can be financially devastating. Use these tips to manage business risks using insurance.
The Customer’s Point of View
A good way to think about your business risk is to consider your customer’s point of view. What could go wrong–and how would that situation impact your customer? If the customer is somehow negatively impacted, you may have business risk. That impact could be financial and even a physical injury.
Next, analyze the business risks you face as an employer. If a worker believes that they have been injured in some way, what potential liabilities do you face? Contractor Magazine explains that contractors are exposed to liability for workers injured on the job.
These thoughts are a good starting point for considering business risks.
Risks in the Planning Stages
Before your start work, you need to plan the project. That planning may involve architects and engineers. A miscommunication or mistake by these professionals can delay a project or cause an accident. Make sure that architects and engineers have insurance to address these risks. If not, you may be exposed to financial liability.
You’ll also need to get a license and permit bond in place before you start work. This type of bond is required in many states. The bond serves as insurance for the customer. A bond insures that a contractor will follow local building codes and other laws. The agreement also requires the contractor to fulfill any building contract in place with the client.
Getting a CGL Policy
The license and permit bond is in place to protect your customer. All contractors should also get a general liability insurance quote to protect the company from potential losses.
Commercial general liability (CGL) insurance is paid on behalf of an insured party (the contractor) to compensate someone for negligence. That negligence is based on a law or contract that is in place. A CGL policy is a critical tool to protect a contractor from financial losses due to a lawsuit.
Safety of the Job Site
Implementing a comprehensive safety plan on a job site can also reduce your potential liability. Your staff needs to be trained on how to properly use equipment, and where vehicles can enter and leave the job site.
Sometimes, a worker is injured on the job. If an injury occurs, the contractor should report the injury as an insurance claim as soon as possible. This step allows the worker to receive medical treatment quickly. That treatment can speed up the worker’s recovery time and reduce the cost of medical care.
Construction Executive explains that all contractors should have a return-to-work (RTW) plan. The plan provides a means for an injured employee to return to work quickly, with modified job responsibilities. This system demonstrates that the contractor is concerned about the well being of their workforce. The RTW plan will help your workers and reduce your potential liability.
Follow these tips to protect your firm from legal exposure. These steps can help you manage risk and grow your contracting business.