Do not take up a client’s job when you are not sure of your protection against the liabilities occurring in the course of accomplishing your job while serving the client. You risk losing all the financial gains and the reputation of your business.
Most contracting firms end up bankrupt when slapped with hefty compensation bills after losing in court when a client sues them for malpractices. Taking on a client project is a risky affair that you should not take lightly. The following are important risk management strategies you need as a contractor for every job you handle.
Begin with the End In Mind
The best mindset for risk management considers the outcomes for the choices you make in the real world or a hypothetical situation. The outcomes are important for your contracting business. They determine whether the business goes on growing or crumbles under the weight of the compensation claims and loss of reputation. Another reasoning for having the end in mind is to make informed decisions about the risks to absorb and those to transfer.
Transfer Most Frequent and Critical Risks
The most frequent risks are most likely to occur, and they need transferring to an insurance company. At the same time, any major risk that can turn the business upside down should also be part of the transferred risks.
Evaluate the Risk Profile Periodically
Avoid making the mistake of doing risk management evaluation only once. You should evaluate the risks periodically so that you become aware of any emergent risks. You also do not want to be letting your money go to waste by covering risks that are not critical and not frequent. The regular updates to your risk management policy ensure that at any time you have all you need for protecting yourself and your clients in your contract obligations.
Use a Reputable Insurance Firm
The need for a reputable firm is to guarantee your claims and to provide a straightforward approach when you are signing up. Therefore, work with companies that have sufficient underwriting capacity to pay up when you are making a claim. Consider the reputation of the insurance company and the way its customer service responds to you. You can call and ask about the specific details of the cover they provide for your situation before you sign up.
Do Not Postpone the Insurance Purchase
In some cases, contractors make a mistake of taking insurance for the partial coverage of their risks with the hope that additional risks not covered will not occur immediately. The thing with the probability of occurrence is that it does not give you a sure bet. Even a 99% likelihood of not occurring implies that there is a possible 1% likelihood of occurrence. Therefore, avoid the temptation to gamble with the risks and instead take all the necessary insurance cover for your contracting business.