How To Protect Your General Contracting Business In 2021

According to studies, nearly 50% of small general contracting businesses are the subject of lawsuits due to work that they have completed.

General contracting businesses take on a lot of responsibility, from installing electrical systems to roofs, general contractors play an integral role in the functioning of buildings and are often blamed for problems that owners notice.

Most of the time these issues aren’t related to the contractor, and this is where it’s important to keep your business insured and protected.

Lawsuits aren’t always from unsatisfied customers or due to malfunctioning equipment but can also arise from employees and partner companies.

According to studies, almost 10% of lawsuits facing companies are related to employees seeking compensation for discrimination, unsafe work, or employee injury.

General contractors know that safety is always a priority and will go to all lengths to protect their employees, but accidents happen and it’s important to keep your business safe.

Only 25% of American businesses are fully insured, and most are either under-insured or have no insurance at all!

Read below on the types of risks which your company may face and the type of insurance and coverage you can use to protect your business.

Below, we go over some of the different risks which general contracting businesses are liable for.

Although some such as general installation are common, general contractors are responsible for the safety of everyone on site and liabilities and lawsuits can often come from unexpected places.

Ensure that your business is protected by getting the appropriate insurance and protecting your business and your workers.

Risks

As mentioned, there are a number of risks associated with running a general contracting business:

Poor Installation

One of the most common causes of lawsuits against general contractors is poor installation of the equipment.

Poor installation can usually lead to premature replacement of the material or lead to issues with the equipment which causes damage to the building. For example, when installing roofing, it’s possible that some shingles are missed which leads to damage to the roofing membrane.

Suddenly, there are a few leaks coming from the roofs only a few months after installation and  the owners of the building are looking to get compensation from the general contractor.

Similarly, when it comes to electrical installation, it’s possible that during the installation process the wiring is inadequately installed and the equipment has powering malfunctions.

In some homes, this can lead to the boiler malfunctioning and not working during the middle of winter, causing residents to become sick or find alternative housing.

These expenses for medical costs, health problems, and separate housing, can be charged back to the cause and the general contractor can be held liable.

We’re confident that the workers you hire are extremely competent and perform excellent work, but accidents can happen and it’s important to make sure your business is protected.

Electricians insurance and roofing insurance are two examples of insurance packages which can directly protect your business from these types of liabilities.

Owners / Visitors 

For small general contracting companies or when performing small jobs in residential buildings, it’s possible that the owner or friend of the owner pops by and gets injured onsite. Although unlikely, it’s not unheard of when performing construction jobs in residential homes as neighbors and owners are always interested in watching the work progress.

When they visit the site, it’s entirely possible that they trip or injure themselves with something onsite and suddenly the general contractor is responsible. Non-workers are usually outside the scope of regular insurance policies and can lead to substantial lawsuits to businesses.

It’s important to protect your business from these incidents as it can lead to reputation damage as well as financial troubles. Liability insurance packages often provide extra coverage for these incidents and can help determine the best package for your needs.

Expired Policies 

No matter where you’re conducting your general contracting business, it has to adhere to the different procedures, requirements and policies dictated by local regulations.

For example, OSHA requirements often explain how the different safety requirements which workers must follow or the different procedures which need to be adhered to.

In addition, local policies regulate how often equipment needs to be inspected, how it’s stored and other policies such as training procedures for on-site workers.

It is the responsibility of the general contractor that they read up on and implement all policies, which are subject to yearly review and constantly updated.

However, it’s possible that a worker on-site is injured, and when OSHA or the Ministry of Labor or a similar body is inspecting the site, they find that you have not updated safety standards up to code.

Although they likely understand that keeping up to date on all the different codes can be difficult and it takes time to implement, as a general contractor you will still be liable for the incident on site.

The types of insurance policies which cover expired policies can be found as a package in standard insurances, such as roofing insurance or electricians insurance. 

A general contractor takes on a huge amount of responsibility regardless of the type of work they take on.

From installing electrical equipment to installing new roofing systems, the function of a building is often the responsibility of the general contracting business.

With this work comes the risk of liability and being responsible for the safety of all your workers, the site, and the installation.

As discussed above, on top of being liable for the general installation, general contracting businesses are also susceptible to lawsuits from non-workers visiting the site or expired policies.

It’s important to protect your business from all sources of liabilities to help ensure your business and workers are protected.

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