Although it is possible to perform a contracted job without an actual contract, it is a serious mistake. A contract outlines the expectations of the job so both parties are in http://www.generalcontractorsinsurance.com/general-liability-insurance/ complete agreement, and a contract can also limit your liability. But can you completely eliminate responsibility for problems on the job?
Unfortunately, it is impossible to completely protect your business from liability. If your negligence causes property damage or personal injury, for example, an indemnity clause in your contract cannot prevent your client from seeking damages related to their associated expenses.
This is because the law protects clients from negligence, gross negligence, and willful misconduct.
What is negligence?
Negligence refers to conduct that falls below the industry standard for reasonable care. If you do not perform your job according to the standard of care deemed acceptable in your industry, a client can file a claim to recover any associated damages.
For example, if you own a roofing company, you are expected to install and repair roofs according to accepted standards in the roofing industry. If you fail to protect the interior of a house from the rain and the homeowner's attic is flooded as a result, you could be responsible to pay for the necessary repairs.
What is gross negligence?
The law considers gross negligence to mean actions (or inaction) that show a reckless or dangerous regard for human or property safety. In other words, it is the same as standard negligence except that the perpetrator's actions are considered not only beneath industry standards, but so substandard that it represents a conscious decision to disregard safety.
This is a more serious offense under contractor law, and it can result in significant penalties. Because gross negligence is such a dangerous claim, it is essential to have a General Contractors Insurance policy to protect your company. No contract can allow a customer to sign away the right to pursue a claim of gross negligence.
What is willful misconduct?
The other type of damage for which a contractor might be found liable is willful misconduct, which is the intentional infliction of damage to property or people. For example, if you get into a dispute with your client and physically assault him or her, this would be considered willful misconduct.
Why do you need contractors liability insurance?
A roofers insurance policy protects you against claims made by clients for negligence or other types of damages. Since your contract cannot eliminate your responsibility for mistakes on the job, you need an additional layer of protection. Obtaining a roofers insurance policy will protect not only your company, but also your employees and subcontractors.