5 Actions That Immediately Increase Your Risk


As a contractor, you have to be careful with the way you conduct business. Each transaction you make should be covered by a purchase order or an invoice and the proper indemnification agreements, and every subcontractor you work with should have the proper types of insurance in place to protect you, the subcontractor and the job owner.

Our business experts do much more than identify risk and put together business plans that protect your company. We are also full-service business consultants who can offer you ways to reduce your risk, and run your business more efficiently. There are many ways that contractors inflate their risk for each project, and it is important that every contractor understand how their actions can negatively affect their companies.

Not Using Written Agreements

You have been using the same subcontractor for years, and you feel as though your relationship with that contractor has developed a satisfying level of trust to allow for handshake and verbal agreements. But if something were to go wrong, it will be the subcontractor’s insurance company asking questions, and your handshake or verbal agreement will not hold up under scrutiny. The situation will only escalate if the incident winds up in court. Put every agreement in writing, even with your most trusted subcontractors.

Assuming Liability Is Covered

A common form of verbal agreement that gets contractors into trouble is assuming that their subcontractors have the right amount and type of liability insurance in place for each situation. As a general contractor, it is your responsibility to make sure that each subcontractor has the proper coverage to protect your interests. Never assume that the subcontractor has liability taken care of. Always check subcontractor insurance coverage before allowing them to start working.

Ignoring OSHA Standards

You allow your subcontractor to skimp on their scaffolding because they have done it before with no problems. But when something goes wrong and someone gets injured, you and your subcontractor will face the wrath of OSHA and the lawyers of the victims. You need to make OSHA standards the law of the land on every job site to reduce your exposure to risk.

Not Checking Insurance Certificates

A new subcontractor you have never hired before hands you a counterfeit insurance certificate just prior to getting to work. Since you have no mechanism in place for checking subcontractor insurance, you accept the certificate and allow the subcontractor to get to work. It isn’t until an accident occurs that you find out that the certificate was a fake. It is important to have a comprehensive insurance confirmation process in place for every subcontractor on every job.

Not Getting Frequent Subcontractors Into Recurring Agreements

Our business consultants always recommend utilizing master subcontractor agreements for those subcontractors that you plan on hiring on a regular basis. With a master subcontractor agreement, you can outline specific coverage terms and responsibilities that will help to protect you during any job.

We understand that the contracting world moves quickly, but that is not an excuse for putting your entire business at risk. Let our experts put together plans that will protect your company, and prevent you from using the most common actions that increase risk for any general contractor.