In a recent report, business and commercial litigation attorney Peter J. Lamont highlighted the benefits of taking a proactive stance in dealing with risks associated with contracting for developers – something insurance agents may be able to support.
Lamont noted that an active approach begins with creating a “living” contract that covers all the risk areas associated with doing business with a developer. He stressed the need for a document that can be adjusted as circumstances call for over the course of the project.
He added that the contractor, his or her lawyer, or carrier needs to review the company’s insurance coverage to make sure it can adequately cover exposure in the event of a claim. It is advisable, he said, that insurance coverage be reviewed annually.
Labor risk could also be mitigated by reviewing staffing requirements and filling them in accordingly before a project starts. Lamont explained that last-minute hiring creates risks because the urgent nature of the job results in lack of time to properly screen employees.
Due diligence is likewise an important step in managing risk in taking on contracting jobs. Lamont stressed that contractors should look at the developer’s project history, and they should look into the latter’s capacity to cover any costs that will be incurred in the course of completing a project. Too often, Lamont said, risk comes from performing contracting jobs for developers who do not have the capability to sustain the cost of a project.
