Will General Liability Coverage Protect Against Faulty Workmanship Claims?
You are a Green Industry professional who takes pride in their your work, as do your employees. You only work with the best sub-contractors. And, your clients just love you—until they don’t.
No matter how good you are at your profession, sometimes a project has unforeseen issues that come back to haunt you later. It happens to even the most seasoned professionals! Maybe your concrete sub-contractor didn’t pour a footer thick enough, or maybe you unknowingly were working with some faulty materials, or maybe you were just having a bad day and mother nature wasn’t cooperating.
If the client isn’t willing to work with you on fixing the problem, and they decide to sue you, they can sue you for three times the cost of the project due to the Consumer Sales Practices Act. Yes, you read that right, three times the total cost of the project for one thing gone wrong. Your General Liability insurance will not cover a Faulty Workmanship claim, nor will it cover Consumer Sales Practices Act allegations.
There are some things you can do to proactively protect your business:
Get a Faulty Workmanship Endorsement added to your policy. It is protection for errors or omission for work performed which is faulty and needs to be repaired or replaced. Not all insurance carriers offer Faulty Workmanship Coverage, so talk to your insurance professional to find out if you can add this to your existing GL policy. The cost ranges from $300-$1,500 per year, and common limits are $100,000-$1,000,000. Similar to a warranty, it pays to repair or replace the work done by you or another contractor.
Always provide your customers with a detailed Estimate. Pay close attention to itemizing materials and labor charges on your estimates.
Make sure your contracts include the right language to protect your business. Have an attorney review your contracts to make sure they include specific language giving you the “right to cure” defects before a homeowner/client can file a lawsuit. The contract should also outline other important items including, but not limited to: scope of work, deposits, delays and refunds, receipts, cost breakdowns, estimates for additional work, and use of sub-contractors.
By reviewing your insurance coverage and contracts now before the spring and summer rush begins, you will protect your business from a devastating law suit down the road. Don’t think this won’t happen to you, because it can and likely will someday. Call me, I can tell you some horror stories.
For a review of your current insurance coverage and to learn more about our years servicing the Green Industry as a proud member of the Ohio Landscape Association, please visit our website or call Greg Botson at 440-537-2292.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2021 Botson Insurance Group.