Carry Disability Insurance Disability insurance provides your employees with a mechanism whereby they can be hurt and still work, Simmonds says. This beats the popular alternative of employees being injured over the weekend and holding out until Monday to file a workers’ comp claim, so they can continue to get paid while recuperating.
“Insurers are firmly convinced that this is going on,” Simmonds says. He adds that disability insurance is affordable, at around $12 or so a week per employee. And it can deter employees from filing costly workers’ comp claims and help attract stable employees.
Certify Your Clients Be sure that your clients have homeowners’ insurance — but don’t stop there. Riggs Construction spells out several insurance requirements, including having homeowners name Riggs “as an additional insured for work done and for building materials stored at the job-site, inside house or garage, continuing until the work is completed and paid in full.”
If the homeowner doesn’t comply, Riggs buys a builder’s risk policy and applies the cost to their contract. Kinsey says that builder’s risk is a better way to mitigate liability than to write damage limitations into contracts.
With the release in January of the EPA’s proposed new rule regarding lead paint work practices in residential construction, consider asking your clients who own older homes to have a lead abator certify that their home is lead-free. This “puts the onus where it belongs: on homeowners and inspectors,” Kinsey says.
Also consider what your clients might require of you. Many remodelers try to reduce their liability premiums by reducing their coverage. But Simmonds notes that more high-end homeowners now require remodelers to have a certain amount of coverage. “Reducing your coverage from $2 million to $1 million isn’t going to cut your premium in half,” he says. “Ask what you’re really saving.”
Narrow Your Focus Limiting your work to remodeling only can significantly cut your insurance costs. “New construction seems to draw a greater degree of litigation,” Leininger says. He adds that new-home buyers often “expect perfection, but that’s never the case,” whether the home is custom or part of a large subdivision.
Similarly, workers’ comp coverage is generally much higher for work considered dangerous, such as roofing and commercial construction.
Your insurer may also proscribe the kind of work you can do, so be aware of any exclusions before entering into a contract with a homeowner.
Cover Your “Employment Practices” Sexual harassment, age-related discrimination, and wrongful termination are typical of a new class of lawsuits that are coming from the Fortune 500 to small businesses, Leininger says. Awards sometimes reach the high six-figures, and are generally covered only by employment practices liability coverage. Policies range from $1,000 to $100,000 per year, Simmonds says, depending on the company’s size, employment policies, and other factors.
Even seemingly minor offenses can get you in trouble. Lately, Simmonds notes, sexual harassment suits aren’t so much of the sleep-with-me-and-get-a-raise variety “as having dirty pictures in the warehouse and downloading porn. And it isn’t just male to female; it’s female to male and male to male.”
Strong employment policies are your best defense. Make sure that your policies are up to date, spell them out in your employee manual, and enforce them judiciously. Above all, reduce turnover. “Any time you hire or fire somebody, you’re leaving yourself open to a potential claim,” Simmonds says.