Four Hidden Risks That Can Cost Contractors Money
From Constructor Magazine
By Ted Devine
CEO, insureon
Contractors and construction workers perform some of the most dangerous work there is – and they’re often competing on price with professionals who cut corners or skimp on quality to keep their costs low. While the temptation to operate a lean business to minimize short-term expenses may be significant, contractors should be aware that skipping essential protections (such as commercial liability insurance) can be devastating to their business’s long-term viability.
Here’s a look at four hidden – and potentially costly – risks that threaten contractors and construction professionals.
Hidden Risk #1: Losing Personal Assets in a Lawsuit
One of the most common misconceptions among contractors (and owners of small businesses in general) is that their personal assets are safe from lawsuits filed against their business. Unfortunately, this is simply not true. If your business is fined or saddled with a judgment, the court has the authority to go after your personal assets to cover any costs your business assets can’t cover.
Costs may include your lawyers’ fees, evidence and court docket costs, among others. You will likely have to take some time off work to appear in court. In other words, you’re looking at a hefty pile of bills – and that’s assuming you’re not found liable.
If a judge rules that you are responsible for causing damages, you could face settlements or judgments that exceed the funds your business has available. And don’t think shutting your doors will protect you from a costly liability payment: if you’re responsible for paying damages, the court can legally seize money from your savings account, repossess your car, come after your home, and otherwise bleed you dry, depending on relevant state laws.
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