How Handyman Insurance and Risk Management Can Grow Your Business

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What sort of risk management practices do you use for your handyman business? If the answer is little to none, you’re in luck.

Risk management is something that every business — from a one-man operation to the biggest corporations — can benefit from.

If you know how to combine basic risk management principles with some affordable handyman insurance, you have a blueprint that may lead your handyman business towards growth and increased profits.

Interested?

Here’s what you need to know.

Protecting Your Handyman Business: Risk Management 101

If you offer handyman services, you’re a business owner. And there’s a chance you may be a sole proprietor of your business, which means your personal assets are vulnerable to any debts or obligations that arise from your handyman business.

In other words: managing your handyman business risks can protect your personal assets, such as your savings and even your home.

Risk management is the practice of identifying potential risks you may face while running your handyman business, analyzing them, and taking the necessary steps to minimize their impact.

 

Risk Management Steps to Protect Your Handyman Business

  1. Identify Risks
  2. Measure Risks
  3. Control Risks
  4. Transfer Risks

Identifying the Risks You Face as a Handyman

The first step in risk management is determining what risks you specifically face while operating your handyman business.

Let’s say you’re involved in an auto accident while driving your work vehicle on your way to a job. Your business name is very prominently displayed on the sides and back windows of your truck, which had all of your tools and equipment needed to complete the day’s work.

Not only could an auto accident cause damage to your own vehicle, damage to someone else’s vehicle, and lead to the possibility of injuries and medical bills… it could also destroy the tools of the trade you’ve spent years acquiring.

An auto accident can happen to anyone at any time, but you face some other risks while you operate your business, as well.

Let’s say you are inside a client’s home repairing drywall, and you have to move a large piece of furniture to complete the repair. After the work is done, the client complains that you’ve damaged their antique serving table and scratched their imported hardwood floors in the process. Third-party property damage is a risk you face every time you walk into someone else’s home to do a job.

Accidents, property damage, injuries, lost equipment… identifying your risks is the first step in managing them.

Measuring and Controlling Risks

The next steps in risk management include measuring and controlling your handyman business risks.

Measuring a risk: Determining what the likelihood is of a risk occurring, and what the potential results would be if it happened.

Let’s look at the above-mentioned auto accident scenario again. According to the National Highway Traffic Administration, an auto accident happens every minute on the road. As many as 20-50 million accidents every year. And the cost of repairing or replacing your vehicle, a third-party vehicle, paying medical bills, and replacing damaged property could run in the tens of thousands of dollars. So this risk measures as very likely to happen, and very costly.

Controlling a risk: Taking steps to reduce the likelihood of a risk occurring.

So how do you control the risk of an auto accident from happening? You take measures such as fastening your seatbelt, removing distractions, and driving safely.

If you want to control a risk of damaging customer property, you may do things such as removing your work boots inside someone’s home, using care when moving furniture, and applying drop clothes before painting.

Transferring Risks with Handyman Insurance

No matter how many precautions you take to control a risk, there’s a good chance you won’t ever be able to completely eliminate the possibility of an unexpected accident or event occurring. Some risks simply can’t be controlled.

These risks should be transferred to insurance coverage that will act as a protective safety net for your business.

No matter how safely you drive, you can never eliminate the chance of an auto accident. If you have commercial auto insurance, however, you can transfer that risk to your insurance policy.

No matter how cautious you are when performing your work, there will always be the risk of a third-party injury or property damage occurring. If you have general liability coverage, you can transfer that risk away from your handyman business.

How does Risk Management and Handyman Insurance Lead to Business Growth?

Now that you’ve got the basics of risk management down, it’s time to get to the big payoff.

Lower Insurance Rates

Certain risk management techniques could lead to lower rates, or a “credit” on your insurance policies. Your attention to risk management can literally put more cash back into your pocket in the form of savings on your insurance rates.

And the longer you go with continued coverage (no lapses!) and no incidents, the more you may be able to save on your insurance rates.

Increased Cash Flow

The biggest payoff to implementing risk management and adequate insurance coverage for your handyman business is keeping your hard-earned cash where it belongs – in your bank account.

Instead of paying out-of-pocket for unexpected incidents and accidents, you can use your cash to grow your business.

  • Invest in digital advertising
  • Build a website
  • Hire an employee
  • Purchase new tools and equipment

More Customers

One final perk to implementing risk management and handyman insurance: getting more business. When you advertise your insurance coverage, or tell potential clients the safety measures you use as part of your risk management practices when performing work inside their home, you are going to stand apart from the competition. Potential clients will appreciate your professionalism, and your business will continue to grow.

Real Life Examples of General Liability Claims

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It’s one thing to be told that general liability insurance can protect you from the most common risks you face as a trade or general contractor, such as third-party injuries or damage to someone else’s property. It’s quite another thing to hear it direct from the contractors who have been in those exact scenarios themselves.

If you’re not sure if you need liability insurance for your contractor, construction, or handyman business…keep reading. The best advice comes from someone who has faced a lawsuit firsthand, and seen the saving grace in having general liability insurance.

Here are the tales of three real-life contractors just like you, and their brushes with construction disaster.

#1. The Case of the Curious Visitor

Sometimes the biggest liability on a project is the one thing you can’t control or manage: an on-site visitor. This is something one general contractor, John, learned the hard way.

John was hard at work on a residential remodel project when the homeowner brought a friend over to check out the progress. The curious visitor was admiring John’s work when he was suddenly struck in the head by a ladder that had been propped up against a wall.

The homeowner sued John for his friend’s injury, expecting the contractor to pay the price for medical and other expenses from the accident.

Luckily, John had general liability insurance. His policy covered the costs of defending himself against the lawsuit, which included attorneys’ fees, court costs, and a settlement.

#2: A Soggy Tale of Water and Woe

Miguel, an experienced drywall contractor with 15 years in the trade, was working on a basement drywall repair project that should have been pretty cut and dry. In order to reach the damaged area, his employees disconnected the home’s sump pump.

After the job was done, neither Miguel or his employee remembered to reconnect the small pump.

Instead of re-routing ground water away from the home, the sump pump sat unoperational. After the drywall contractor and his team left, the basement flooded and the home suffered from extensive water damage.

Miguel’s general liability policy covered the costs of repair for the property damage that resulted from the incident. The water damage could have cost Miguel a huge bill for repairs, but thanks to his general liability insurance it only cost him a deductible.

#3: All it Takes is One Mistake

With more than thirty years in the business and a perfect track record, Tony was an electrical contractor in high demand. When a local commercial project was being built, Tony was their first pick to install lighting throughout the building.

Unfortunately, Tony’s 30-year track record went up in smoke when an electrical fire decimated the commercial building. A fire that ultimately led back to Tony’s completed work.

Tony’s bad luck didn’t stop with the first mistake made in his life-long career, either.

Because he had gone so long without an accident, injury, or claim to his name, Tony had decided to save some cash earlier that year and let his general liability policy lapse. He had no coverage for the incident, and had to pay for the property damage and lawsuit that followed out of his own pocket.

The Moral of the Story

Two out of three of our tales concluded with a happy ending. The contractors filed a claim with us, and we were able to cover the incident. The cost to each was only a fraction of what it could have been. The contractors paid their deductible and went on their way.

But not every story ends so well, and for one of our contractors, one small mistake resulted in a major financial setback.

General liability insurance provides a safety net to protect your business in the event of an unforeseen incident. Like most of your safety equipment, there’s a chance that may never need it to kick in and do its job. But the one time something does go wrong, you’re going to be very glad you’ve got all your protective measures in place.

Construction is a high-risk industry, and there’s always a chance a job could result in accident, injury, or property damage to a third-party. If you have general liability insurance, then your story could be one more that ends happily ever after.

What Does Contractor Pollution Liability Insurance Cover?

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Your construction insurance coverage is there to protect you from the unexpected incidents that could happen on (and off) the project site. Injuries, property damage, auto accidents, theft of your tools and equipment, and even damage to the project itself. But there may be a hole in your current coverage that is leaving you exposed to a major risk:

The risk of a pollution incident.

Environmental pollutants are a big concern for general and trades contractors.

And you don’t have to work with fuel, oil, or hazardous chemicals to run the risk of exposing yourself to a pollution incident.

Two Construction Workers Looking at a Broken Pipe

General and trade contractors not only have to worry about the liability and damages for substances they bring onto a site, such as paints, sealants, lubricant oils, and asphaltic cement, but also the potential for hidden contaminants which may already be present on a project site.

Old paint containing lead. Asbestos-containing materials. Contaminated fill dirt.

You may be surprised how often you run the risk of releasing contaminants, aka pollutants, into the environment as a result of your work.

  • Incomplete or improper HVAC system construction could result in mold and fungus being released into the air of a residential or commercial building.
  • A remodeling job could disturb asbestos-containing materials.
  • Sandblasting a bridge could release dust-sized particles of lead paint into the air.
  • Site excavation could disturb contaminated soil.
  • Vandalism of a project site could result in a fuel, oil, or chemical spill.

What you Didn’t Know about You GL Coverage

Your general liability coverage is there to protect you from claims for bodily injury or property damage as a result of your work. Unfortunately, most GL policies contain some exclusions that prevent the policy from covering every possible incident.

And one of the most notable exclusions in a GL policy is the “total pollution exclusion” clause that can leave you holding a costly bill if a pollution incident occurs.

Luckily, you can patch this hole in your GL coverage and shore up your insurance defenses with pollution liability coverage.

Factory Polluting the Environment

What Does Pollution Liability Insurance Cover for Contractors?

Contractor pollution liability insurance will generally cover bodily injury, property damage, and expenses incurred in investigating, settling, or defending a pollution claim. Pollution liability insurance will typically also cover cleanup costs to remove, neutralize, and restore damaged property as part of the covered damages.

Understanding Your Pollution Coverage

Pollution insurance policies can differ, so be sure you understand the following two key components of your coverage:

1. What is a pollutant?

Your coverage may provide a broad definition of what is considered a pollutant, or it may be more narrow. Generally speaking, a pollutant is often defined as:

“An irritant or contaminant, whether in solid, liquid, or gaseous form, including — when they can be regarded as an irritant or contaminant — smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.”

Talk with your construction insurance professional to be sure your coverage is broad enough to cover all pollution risks, or at least covers the specific risks you may face in your trade.

2. Gradual vs Sudden Pollution Release

A pollution policy that covers both gradual and sudden pollutant releases will give you the broadest protection against accidents and mishaps. If your policy only covers a sudden, accidental pollution incident, you could be left at risk for pollution events that aren’t discovered until months (or even years) down the road.

The best way to protect your business from the high costs of a pollution event is to be sure your policy covers both gradual and sudden events and has a broad definition of what is considered a pollutant.

Fumes from sealants, floor coatings, and finishes; disturbing lead paint, asbestos-containing materials, or naturally occurring asbestos; excavating contaminated soil; leaking storage tanks… you run the risk of a pollution event happening on a daily basis.

Pollution incidents could quickly add up. Property damage, bodily injury, and clean-up costs are just the start. You could also be facing some major reputational damage as a result of one small accident, too.

Only pollution liability insurance will offer you the peace of mind and broad protection against the risk that you unearth, disturb, or release a pollutant while doing your job.

What\’s Your Construction Risk Management IQ?

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What’s Your Construction Risk Management IQ?

 

What's Your Construction Risk Management IQ?

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Are you a super savvy, risk reducing master on the jobsite? Take this short true or false quiz to find out just how safe and protected your business is.

Business Risk Management

True or False? I can start my contracting business without being licensed and insured.

False: In certain states such as California, you must be “duly licensed” by the Contractors State License Board. If you are doing business in California, you are also legally required to disclose to your client whether or not you carry general liability insurance. While states all have different licensing and insurance requirements, being licensed and insured is the best way to improve your chances of getting work, and protect your assets once you have started on a project.

True or False? I only need to be bonded for public projects.

False: Bonding not only gives you the ability to bid on public projects; more and more private projects are requesting bonded contractors and subcontractors, as well. If you are not bonded, you could miss out on lucrative private projects. Bonding will give you the competitive edge over non-bonded competition, and provide access to more work.

True or False? A construction contract completely protects me from liabilities and lawsuits.

False: A contract is an extremely useful tool for protecting you and your business and reducing liability risks, but only when it contains the right clauses and conditions.

Especially if you are just starting out in the construction industry, it’s smart to have a legal professional experienced with construction contracts guide you through the process.

True or False? A legal judgement against my business may affect my business and personal assets.

True: Your personal assets can be at risk in the event a judgement is made against your business. Imagine as scenario where you are involved in a lawsuit and a judgement for $1M is awarded against your business. If your insurance coverage limits max out at $500,000, your business will be responsible for the remaining $500,000. If you do not have the assets available in your business, your home and other personal assets may be at risk, depending on how your company was set up and whether or not it is incorporated.

Safety Risk Management

True or False? It is the responsibility of the project owner to keep the project site safe.

False: According to OSHA Safety and Health Regulations for Construction, it is the responsibility of the employer to initiate and maintain such programs for accident prevention.

“No contractor or subcontractor for any part of the contract work shall require any laborer or mechanic employed in the performance of the contract to work in surroundings or under working conditions which are unsanitary, hazardous, or dangerous to his health or safety.” -OSHA

Bottom line: it is your responsibility to provide a safe work environment for your employees. You write the checks, you keep them safe.

True or False? One in every five private industry worker deaths occurs on a construction site.

True: It is an unfortunate fact that 20% of workplace deaths happen within the construction industry. According to OSHA, the leading causes of worker deaths on a construction site are:

  • Falls
  • Struck by object
  • Electrocutions
  • Caught in/between

These “Fatal Four” causes should get your complete attention and concern on a job site. Incidentally, fall protection is the #1 most cited OSHA violation on construction sites, as well.

True or False? If an employee is hurt on the job, workers’ comp will help them with medical and other expenses.

True: Carrying workers’ comp insurance will protect you and help your employees in the event of a workplace injury. Workers’ comp will help provide for medical and recovery expenses for your employee. This reduces the risk that an employee will try to get reimbursed for such expenses directly from you, and may even cover your legal fees should such an event occur.

Project Risk Management

True or False? My general liability insurance covers the project property during construction.

False: Course of Construction Insurance, sometimes known as Builders Risk, is the only way to reduce risk and protect property during construction. This type of insurance prevents you having to come out of pocket for repairs/replacements if burglary, theft, vandalism, fire, flood, or some other unforeseen event should damage the property and your materials during the course of construction.

True or False? My commercial auto policy protects my tools and equipment on the way to job sites.

False: Commercial auto insurance will protect your vehicles and cover your assets if you or an employee get into an accident while on the job, but your tools and equipment are not covered under this policy. The only way to protect your tools and equipment on the road is to carry tools and equipment insurance (also known as inland marine).

How did you do? Are you a construction risk management master-of-all-trades?

Or do you need to draw up some blueprints on how to reduce your risks on and off your project sites?

Managing construction risks is an important part protecting your employees, your assets, and the future of your business.

Smiling Female Contractor

 

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