Guide for tradespeople of contractor risks faced in the workplace
Risks for contractors working in the construction and building can be high. But contractor risks could also impact many different tradespeople.
Being aware of the list of contractor risks is the first step to reducing them. Taking out the right insurance can provide a vital financial safety net should something go wrong.
This article covers what insurance you can take out to protect against risks. We’ve also got suggestions on how tradespeople can avoid work-related risks.
What are contractor risks?
The list of contractor risks depends on your trade and the type of job you are on. They include:
Damage to property
This could be caused by you, by others (such as vandalism) or by nature (storms, fire and flooding). In construction, this could disrupt or delay the completion of building work.
Damage or loss to plant and equipment
This could severely affect your ability to continue or finish the work you are doing.
Cash flow challenges
Managing cash flow can be a major business headache. Cash flow is how you measure money coming into and out of your business. There are steps every contractor can take to improve your cash flow.
Faulty finished products
For any contractor, especially builders, quality of work can pose a business risk. Contractors are expected to work to certain standards. These are usually agreed upon in advance. Failure to meet these standards can have financial and other repercussions.
Delays and missed deadlines
Delays are a fact of life for contractors. They can be down to a variety of reasons. There could be delays in the delivery of materials. Delays could also be caused by damaged or faulty plant, machinery and equipment.
Accidents and injuries
Accidents and injuries sometimes can’t be avoided. We’ve some tips below on how contractors can avoid these risks.
Labour shortages
Every job should be carefully planned regarding the work it requires. This includes having the right people with the right skills available at the right time.
Poor management
Contractors are usually also project managers. Risks increase on jobs that are poorly planned and managed. Even poor paperwork and administration can add to the risks contractors face in getting jobs completed.
Poor budgeting
Contractors are in business to make a profit. Poor budgeting and cost control can create expensive cost overruns for a trade business. Using a budget planner can help to reduce the risk.
Payment disputes
There’s often a strong link between disputes and poor management and poor budgeting. Contractors can face the risk of not getting paid. Disputes over money can arise for many reasons. Knowing how best to deal with customer complaints can reduce the risk.
Rising costs
The cost of materials and equipment could unexpectedly go up. The same applies to labour costs. Contractors have to keep a tight rein on them all.
Slow work periods
For many tradespeople, there is a weather-related cycle to the year. Seasonal weather can be a big risk for certain trades.
Economic downturns
It’s hard to predict what the economy will do. But it can have an immediate impact on contractors and can be a big risk. In a downturn, there’s less work to go around – and that’s a big business risk.
Increased competition
Contractors, like all businesses, face competitive pressures. Rivals might undercut you for work. They might provide more services than you can offer. They might poach your staff.
Setting unrealistic expectations
Contractors always have to be careful in managing customers’ expectations. Problems can arise if you don’t give yourself enough time to complete jobs to a high standard. The risks to a contractor could be financial as well as to their reputation.
Changing customer requirements
This is another risk that can be very hard to predict. If a customer moves the goalposts midway through a job, it can put you in a difficult position.
What is contractor all risk insurance?
Insurance helps businesses reduce the financial burden of the risks they face. It does this by paying for claims you make for risks covered by your insurance.
Lots of insurance products are available. Let’s start with contractor all risk insurance. This is a similar type of insurance product as contract works insurance.
It provides cover for accidental loss or damage to a property while it is being built. This can protect your business while work is underway during the contraction phase of projects.
It’s worth noting that different insurers offer cover under contractor all risk insurance.
Shop around and make sure you understand exactly what is covered by different insurance products. Contractor all risk is often bought by businesses as an additional layer of insurance. It can cover tradespeople for risks not covered by other general business insurance products.
The cost of contractor all risk insurance usually varies according to:
- Total value of the project
- The period it needs to cover
- The type of project and risks involved
It might not cover:
- Defective work
- Wear and tear
- Losses or damage that could have been avoided
- Lost profit on a project
Other insurance for contractors
If you’re in business, then you need insurance. It’s as simple as that. For example, all Checkatrade members are required to have public liability insurance (PLI as standard).
When you’re looking for the best business insurance, price is going to be a factor. That’s where we can help.
When you join with Checkatrade, you could be saving up to 20% off the cost of your PLI. Log in to our Member’s Area today and see what other savings you could be making!
Types of insurance
For all types of contractors, there is insurance that might benefit your business. Bear in mind that some of these are also legal requirements:
- Employers liability – This provides cover if you have staff working for you
- Public liability – This protects your business if members of the public are injured
- Professional indemnity – This provides cover for errors you make on projects
- Tradesman insurance – This covers a wide range of risks that tradespeople might face
Cover for building contractors
For building contractors and construction workers, there are various specific insurance products available.
Cover for other contractors
Here are some more trade-related insurance areas:
Steps you can take to reduce risks at work
The Health and Safety Executive has advice on managing and assessing workplace risks. You could consider gaining SafeContractor accreditation. There’s also membership of CHAS, which specialises in compliance and risk management for contractors.
Probably the biggest risk area to contractors is safety. There are plenty of measures you can take to reduce the risks of injuries or accidents. Both to you, colleagues, other people working with you and the public.
These are some solutions in areas where risks are higher:
- Making sites safe and secure
- Knowing about first aid
- Using machinery, tools and equipment
- Working on scaffolding
- Working at height
- Using personal protective equipment
FAQs
What are the main risks facing contractors on jobs?
These can be broad-ranging, depending on your trade and the work you are undertaking. Safety is a major risk, but every potential risk should be closely considered before taking on a job. That way, you can take out the right type of insurance, should you need it.
What does contractor all risk insurance cover?
It provides cover for accidental loss or damage to a property while it is being built. This can protect your business while work is underway during the contraction phase of projects.
What other insurance protects against contractor risks?
A wide range of insurance products provide a certain amount of financial protection to contractors. These include public liability, employer’s liability and professional indemnity insurance.
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