5 Steps For Good Risk Management When Hiring Any Contractor

1. Only use an insured (and bonded when necessary) contractor. It's always possible to find someone who will do the job for less than a reputable, responsible contractor. It's simply not worth the risk. When you choose to use an uninsured contractor, you are also choosing to be held responsible (and possibly legally liable) for their actions and any damage they cause. Also, demand confirmation in writing from the contractors that all of the subs used for the contract either have their own insurance, or are listed by name on your contractor's policy.

2. Call the contractor's insurance company to verify coverage is active. Virtually no one does this part, and it is critical. Unverified coverage is the same as no coverage. All necessary information to complete this step should be found on the certificate of insurance provided by the contractor.

3. Only use contractors who are legitimate businesses, registered with the state and county. Check
the name of the contractor's legal entity against the State Comptroller's entity search to ensure they are active and in good standing. It can be extremely difficult to hold an individual or sole proprietor responsible for damages like you can a legitimate business (LLC, Inc., LP, etc.)

4. Require the contractor to add you as an additional insured party on their insurance policy. This
will provide you extensive protections if the contractor is responsible for any bodily injury or property damage liability to any third party.

5. Require a Hold Harmless agreement and Waiver of Subrogation to be provided by the
contractor, and written in your favor. It is best if you have your attorney review these two
documents before hiring the contractor, as they are critically important protections that prevent
damaged third parties from seeking recovery of their losses from you.

Questions? Other topics you want to cover?
​Schedule your no-cost consultation with Matt now! 
mrodgers1@farmersagent.com 
940-704-7822