I don’t have to tell you that liability and the protection of our livelihood has become almost a full time job. Insurance, and the paperwork that accompanies it now, is a way of life for most of us. What does that do to our cost of managing our insurance? Additional mailings, other administrative requirements, tracking and analyzing and maintaining the extra paperwork required all have associated costs that should be taken into account when you bid your next job. Additional paperwork is estimated at 15%-18% with each new job file. How Subcontractor Compliance — or Non-Compliance — Can Affect You Whether or not your trade partners or subcontractors are compliant with insurance requirements can affect your business, too. First, you need to be aware of which of them are compliant or not because that could affect your ability to continue working with them. And consider the possible cost of their non-compliance: you could be named as an additional insured and be required to increase your liability insurance minimums, your worker’s compensation and your overall umbrella. The question remains about what to do if any of your trade partners or subcontractors are not compliant. I suggest trying to make them understand that for the good of the team they need to comply with the insurance companies requests. This is easier said then done, especially when you look back on the years of trouble-free work they performed. Retraining them on the new procedures, such as having a subcontractor agreement accompany every proposal, has become a necessary part of everyday business, but something they may resist. What Is the Risk of Non-Compliance for You, the Contractor? In states where a license is required, this is a non-issue. No insurance equals no license, which means no permits and ultimately, no work. If you are working in states with less stringent licensing requirements, your company risks everything day after day. So the question is: what are you willing to risk? There is more than a sense of pride to crossing every “t” and dotting every “i” when filling out insurance paperwork — there is a sense of ownership. For more information about liability insurance, read NAHB’s white paper on Risk Transfer for Trade Contractors. You can find it on the NAHB Web site under General Liability Insurance. It outlines the risks contractors are liable for and the methods available to them to manage those risks. Daryl Kemp, CGR, CAPS, is president of the remodeling company, Blackberry Builders, Inc., based in Elburn, IL, and a classically trained cabinetmaker. For more information, contact him via e-mail. | 
Times have changed over the past 20 years. Back then, industry-related lawsuits were less prevalent and problems and disagreements were handled out of court. Insurance was for the big companies. A small contractor could make a living on the wink-and-nod method of doing business. 