If you’re a contractor, busy schedules and complex projects can make it difficult to keep paperwork, documents, and contracts in order. It’s important to keep a paper trail of your work and practice due diligence. Keeping all your working documents in order shows that you treat your business, customers, and subcontractors responsibly. It can also be important for your insurance company when assessing your business or when you’re filing an insurance claim.
Why is contractor paperwork important when purchasing insurance?
Underwriters may want to have access to any business documents that help them see the big picture so they can correctly assess your insurance needs. When doing a review of your business, they want to make sure that they’re correctly classifying your risks and identifying your exposures. Understanding your business costs and operations helps the underwriter ensure that you’re getting the right coverages and insurance limits to properly protect your business.
Businesses without adequate documentation can be rejected because their risk profile is unknown. In general, businesses that are doing their due diligence by taking the necessary steps to properly document their work are showcasing that they have good housekeeping practices and are organized. Insurers may prefer this because these types of contracting businesses are often more successful and have better risk management practices.
Why is contractor paperwork important when a loss occurs?
Claims from contracting businesses may have to do with losses stemming from liability lawsuits. In many of these lawsuits, the contractor is being charged with negligence after an incident occurs where property was damaged. Being able to provide the necessary documentation can be helpful if your contracting company is wrongfully blamed for an incident.
It’s the responsibility of the contractor to obtain, maintain, and keep their records easily accessible. On a jobsite, there may be multiple contractors and subcontractors working at any given time. With that in mind, without the proper documentation there’s a chance you could be held liable for work or damage even if it wasn’t performed by you or your employees.
Contractor paperwork documentation and procedures
If you haven’t already, you should develop documentation and record keeping procedures that are appropriate for your contracting operation or service. Once procedures are in place, it’s equally important to ensure that all managers, supervisors, site foreman, and workers understand and follow the procedures. It’s good company practice to hold a workshop on documentation retention procedures with your employees and have them sign off that they understand and have copies of the procedures.
For construction jobs, some of the documents that may be obtained and maintained as part of your documentation procedure include:
- Project tenders/estimates
- Contracts or work orders
- Duty to perform documents
- Site inspection forms
- Tests on work completed
- Documentation for materials delivered to the site
- Documentation of your risk services assessment
- Certificates of insurance from your subcontractors
Ensure you’re covered
Despite your planning and preparation, things could still go wrong. If that happens, having the right coverage in place is vital. To learn more about how insurance can help protect your business and your bottom line, visit our contractor business insurance page today.
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.