I'm not sure at this point if this familiar phrase has been used more over the years by corporate gurus or my high school football coach, but it seems to summarize a great point. That is, in any business or competitive enterprise, if you want to succeed in the long run, you have to take care of the fundamentals.

In residential construction, as many builders have realized all too often, it appears "closing statement bandits" do a fraction of the work that you and your team do, yet reap the same, if not greater, financial reward. Therefore, when the stars align and you're able to string together a good group of wins, it's important to protect your lead. This becomes increasingly important during times when those wins are fewer and further between.

One of the great tools in your tool bag to help you fend off tough opponents has been, and still is, commercial general liability insurance. Many builders and remodelers operate without adequate liability coverage in place, often not realizing the exposure until a claim forces the issue. Including this item in your soft cost structure for each job will more than pay off financially in the long run. As for your sleepless nights, well, they should now at least be kept to a minimum. One significant loss paid by you, and not the insurance company, will more than convince even the strongest skeptic.

Perhaps the most satisfying aspect in building homes is seeing tangible progress. However, all too often, builders prioritize short-term, tangible results over the protection of long-term gain and success. Hey, it's understandable. It's often very hard to understand the value of a good defense until, that is, you've been run over by a good offense.

In today's building environment, both technology and savvy consumers are prepared to protect their interests, so you should be protecting yours to the fullest.

Risk Management Fundamentals for Builders and Remodelers

When it comes to risk management for builders and remodelers, the fundamentals should include, at a minimum:

1. Commercial General Liability Insurance
2. Builder's Risk Insurance — protects your project itself, from the ground up, against loss during construction. If you're unclear on how this differs from general liability, we break it down here.
3. Comprehensive Contract with Owner
4. Comprehensive Subcontractor Agreement
5. Third Party Warranty

We hear of many absurd claims against builders, but we also hear of legitimate claims where serious negligence and/or resulting injury have occurred. When the fireplace mantle falls off in year three of the home due to improper installation and seriously injures a child, you don't want any holes in your defensive line.

Why a Strong Defense Matters More Than a Good Offense

When you get down to it, the successful completion of most construction phases is left in the care of others. While you qualify, select, and train your subcontractor and vendor base to work in each home, it's equally important to put protections in place for when things go wrong. Even the most conscientious builder can't prepare for the position he or she will be placed in due to the unforeseen negligence of others working on their behalf.

Comprehensive, well-written liability insurance can provide you a solid defensive front. Often, matters that trigger insurance coverage need only to be defended by capable attorneys, without judgments or payments to claimants ever being made. In any event, these matters can cost considerable dollars, not to mention valuable time. These policies are ultimately there to free you up to keep the ball moving and be successful doing what you do best.

The insurance industry, like the building industry, is changing rapidly, and those changes can affect a variety of issues in your business. We're here to ensure that your team is prepared to take, and more importantly stay, on the field.