What You Need for House Remodel Contractors

In the previous articles we discussed the need for permits and for hiring licensed professionals for certain tasks. In the last article in the “How We Protect Our Clients” series we’re going to touch on the topic of insurance. As with the previous article, much of the risks associated with not having a licensed and bonded contractor are quite similar to the risks associated with not pulling a permit or hiring a licensed professional. Instead of reiterating those same risks I’d like to do two things:

One: Point you to this article from Landes Blosch on the necessity of having a licensed and bonded contractor. This article is so well written on the subject that there is really nothing of note that I can add to it.

Two: Discuss our processes at Southern Mesa on how we protect our clients both before we start construction and how we protect our clients upon completion of our projects. We’re going to start with our subcontractors and backtrack a bit from there.

Our Residential Construction Process

There are certain forms that are required by law for general contractors to collect before hiring subcontractors. The 2 required pieces are proof of insurance and a W9 tax form. Oftentimes there is so much going on throughout the day that general contractors will forget to collect this information and try to get it at a later date, i.e. once final payment needs to be made to the subcontractors. If the subcontractors want to get paid they’ll send over the information asap to get their check. Some general contractors remember the need for these documents once they’re reminded by their CPAs around tax season. While a few other general contractors never ask for these documents as they assume they’ll never get audited. Of course the major issue with waiting to get this information is the general contractor cannot be sure if the subcontractor he’s hiring is actually up to date on their insurance premiums, so it only elevates the risk of having unprotected contractors on your property. 

Another big issue with construction workers is that Personal Protective Equipment (PPE) in residential settings can be rare. In commercial projects, things like hard hats, eye protection, and even hearing protection is mandatory due to enforced OSHA regulations. Such regulations don’t exist in the residential arena unless it’s a large-scale new subdivision build or multi-family project (i.e. apartments). Without these regulations you’ll have contractors operating equipment, like grinders, which spray sharp shards of debris everywhere without wearing eye protection. If the contractor or their employees are not insured than you, the homeowners, could be on the line for medical bills should the worker need medical attention. Your homeowners insurance would likely cover you in this scenario but why risk it?

Insurance for the Residential Construction Process

At Southern Mesa we’ve drawn a hard line on not allowing subcontractors on our projects without first having them submit a contractor packet that we developed. This contractor packet consists of a few things but the most important item we want to see is an up to date insurance policy with adequate coverage on their bond and insurance. If they have employees we want to confirm they are covered through workman’s compensation as well. Only when the packet is completed can the subcontractor perform their work.

The reason for this approach is that before we begin work with our clients, we want to provide our clients with proof of insurance for Southern Mesa employees as well as our Subcontractors. As a client you will be able to see all documentation to verify that you are protected and not just taking our word for it. 

A quick caveat; sometimes due to changes in scope of work or project duration we may have to use a different subcontractor than initially planned for. Even then, we will follow the same protocols of having the subcontractor fill out the contractor packet before beginning your work. You, the homeowner, will receive a copy of their bond (when applicable) and insurance before they begin.

Protecting Your Property After a Contractors Finishes the Job

So before we (or a subcontractor) can begin work we have to demonstrate to you the client that you’re protected via our insurance policies. Does that mean that you are in the clear? For the most part, yes. However, at Southern Mesa, we take one additional step before we accept final payment from a client and before paying a subcontractor a final payment. Before we collect a final payment or submit a final payment to a subcontractor we fill out a legal document called a lien waiver. A lien waiver is a document in which a contractor acknowledges that they have been paid in full for the work they have completed and because they have been paid in full they will waive the option to place a lien on your property. In all actuality an invoice being marked as paid in full should prevent anyone from attempting to place a lien on your property, but for you the homeowner this is an extra layer of insurance.

At Southern Mesa we recognize that construction is a high consequence activity even for the most simple of tasks. We take the necessary steps to try to mitigate the risks for ourselves as well as our clients by: 

1. Not engaging in illegal work
2. Hiring only licensed professionals as our subcontractors
3. By offering proof of protection to our clients at the beginning of the project, and throughout the various stages of completion when warranted

 From this article the process can sound daunting, but if the rules are followed from the beginning, it can be a fairly seamless process culminating in a finished product that you will love and know was built safely.