Top 5 Ways to Avoid Risk as a General Contractor

Working as a general contractor can be quite rewarding. You get to be your own boss, set your own hours, pick the projects you want and work with your hands. However, you are also at risk of finding yourself accused of making mistakes or doing a bad job by a client after you have already done the work on their home.

As a contractor, you shouldn’t have to risk damage to your reputation or lost income because of issues you could easily prevent. Here are five ways to protect yourself from claims by clients.

Make sure you have a written contract

The first and most important thing you can do is to create a written estimate and then sign a contract with each client or company that hires you. Too many contractors choose to rely on verbal agreements, which can later result in arguments and problems. Committing everything to writing will protect you and your reputation.

Get very specific about expectations

Does the client have a firm deadline by which they need the work done? Do they have special requirements regarding materials or the way that you behave in their home? Do you have specific requirements regarding down payments and how frequently clients must pay on the balance for you to continue working? These important expectations should be part of your written contract. That way, everyone knows exactly what the other party expects and desires.

Follow your contract as though it were the law

When you sign a contract with a client, you have an obligation to fulfill your end of the deal. From arriving at work at a certain time each day to agreeing not to smoke on the premises, there are many terms that the client may set that you must comply with to avoid violating the contract.

You should do everything in your power to follow every rule set in writing to ensure that you fulfill your obligations and don’t leave yourself open to action by the client.

Be careful about the subcontractors you hire

The work a contractor does is only as good as the people performing the manual labor. Although it can feel like a smart business move to hire someone accepting the lowest possible hourly wage, it is often better to hire someone with the right skill set than someone who will do manual labor for cheap. When you cut corners with subcontractors, you leave yourself open to claims of shoddy workmanship.

Carry professional insurance to protect you from claims

Sometimes, no matter how specific you were or how carefully you follow the contract, clients will be unhappy with the work you do. That may be either due to the personality of the individual or perhaps a hope to game the system and get a discount or free work by complaining. If a client wants to bring a claim against you, having good insurance that protects your business is critical.

Some policies will even cover the cost of an attorney to represent you in the claim. Other times, you may need to hire your own attorney, but the insurance company will eventually repay you if the courts side with you.

It’s important to work with an attorney who’s familiar with contract laws and construction litigation specifically. This is not a generic area where any attorney can make a case properly. An attorney with experience in the right area can make all the difference if you are pushing back against an unsubstantiated claim by a client.