I’m not sure at this point if this familiar phrase has been used more of the years by corporate gurus or my high school football coach, but it seems to summarize a great point. That is, in any business or competitive enterprise for that matter, if you want to succeed in the long run you have to take care of the fundamentals.
In residential construction, as many builders have realized all too often, it appears “closing statement bandits” do a fraction of the work that you and your team do, yet reap the same, if not greater, financial reward. Therefore, when the stars align, and you’re able to string together a good group of wins, it’s important to protect your lead. This becomes increasingly important during times when those wins are fewer and further between.
One of the great tools in your tool bag to help you fend off tough opponents has been, and still is, commercial general liability insurance. It’s estimated that out of the 19,000 builders and remodelers in the Texas, about 6,000 of these actually carry liability insurance. Including this item in your soft cost structure for each job will more than payoff financially in the long run. As for your sleepless nights, well … they should now at least be kept to a minimum. One significant loss that is paid by you, and not the insurance company, will more than convince even the strongest skeptic.
Perhaps, the most satisfying aspect in building homes is seeing tangible progress. However, all too often builders prioritize short-term, tangible results over the protection of long term gain and success. Hey, it’s understandable. It’s often very hard to understand the value of a good defense, until that is, you’ve been run over by a good offense.
In today’s building environment, both technology and savvy consumers are prepared to protect their interests so you should be protecting yours to the fullest. When it comes to risk management for builders and remodelers, the fundamentals should include at a minimum:
Risk Management Fundamentals for Builders and Remodelers:
- Commercial General Liability Insurance
- Builders Risk Insurance
- Comprehensive Contract with Owner
- Comprehensive Subcontractor Agreement
- Third Party Warranty
We hear of many absurd claims against builders, but we also hear of legitimate claims where serious negligence and/or resulting injury have occurred. When the fireplace mantle falls off in year 3 of the home due to improper installation, and seriously injures a child, you don’t want any holes in your defensive line.
When you get down to it, the successful completion of most all construction phases is being left in the care of others. While you qualify, select, and train your subcontractor and vendor base to work in each home, it’s equally as important to place others in a position to proactively work for you in the event that things go south. Even the most conscientious builder can’t prepare for the position he or she will be placed in, due to the unforeseen negligence of others working on their behalf.
Comprehensive, well-written liability insurance can provide you a solid defensive front. Often, matters that trigger insurance coverage need only to be defended by capable attorneys without judgments or payments to claimants ever being made. In any event, these events can cost considerable dollars, not to mention valuable time. These other team members are ultimately prepared to free you up to keep the ball moving and be successful doing what you do best.
The insurance industry, like the building industry, is changing rapidly and those changes can have an impact on a variety of issues that affect your business. We’re here to ensure that your team is prepared to take, and more importantly stay, on the field.
Ross Conner, Partner at Hotchkiss Insurance