Identifying and Preventing Common Contractor Lawsuits

As a contractor, you should prepare for certain types of lawsuits which can be costly and time-consuming. No one wants to go to court, but there are ways to reduce your chances of getting sued in many cases. If you are a contractor, here are some of the most common types of contractor lawsuits, as well as tips on how to avoid them.

Common Types of Contractor Lawsuits

During your career, you may encounter the following contractor lawsuits, so you must prepare from a legal perspective:

  • Price Acceleration Claims – Occasionally, contractors must exceed the agreed-upon budget to meet certain requirements, to finish a project on time or ahead of schedule. Price acceleration claims are typically filed by a client who is required to pay the difference if the agreed-upon budget is exceeded.
  • Different Site Conditions Claims – Individuals file such claims when the described condition of a job site does not match up with its actual condition. For example, if a contractor is hired to dig a foundation, and they are told the building is on a level, relatively gently sloping lot, but it is actually on an unstable hillside, they can file a claim if the client knew of this beforehand.
  • Damage Claims – Damage claims are filed when a contractor damages property while completing a job. In some cases, the contractor can be held liable if the damage is great enough.
  • Delay Claims – A client files a delay claim if they believe the contractor is taking longer than was agreed. Delays often result in the client losing time and money.
  • Change of Work Order Claims – Change of work order claims are filed when the contractor makes a change the client did not agree to.

Reducing the Risk of a Lawsuit

It is impossible to avoid some claims, but contractors can take simple steps to reduce the possibility of lawsuits. An easy way to do this is to actually become friends with your clients. You should avoid violating business protocol, but when you are on good terms with your clients, they are less likely to sue you.

It is tempting to forego insurance as a contractor, especially if you are on a small budget. Unfortunately, if you do not have insurance, you can lose everything you have in a single lawsuit. If you make a mistake during a project, your insurance can ensure you aren’t sued for everything you own. Compared to the potential cost, liability insurance is a great investment.

About Moody Insurance Worldwide

Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.