Remodeling as a second language - Insurance

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Because there are many more things that can go wrong in a remodel (you'll often be responsible for more process types and various sub-trades), your contract needs to make an attempt at addressing those issues as well. Since you can never address every issue that comes up, be sure to include an exclusion such as, "Excludes anything not specifically listed in the above inclusions."

Insurance
Insurance will most likely be required by the local jurisdiction you work in. Even if it were not, it's something you simply cannot do without. Just because you are the best in the area and everyone loves you, things can still go wrong.

Remember, remodeling occurs in a less controlled environment than your shop work. You have to worry about the actions of subcontractors and the homeowners themselves. What do you suppose would happen if the homeowner's child fell of the new deck you were building that didn't have a railing on it yet? Do you suppose a sign, or the yellow tape you put up warning of the danger would protect you from the liability incurred as the result of an accident on your job site? 

In addition to insurance, you may be required to post a bond. This ranges from a blanket/general-type bond required for licensing, to job-specific bonding for larger projects. Bonds can protect both the client (from poor workmanship or failure to complete a project) and the contractor himself    (ensuring payments from his client). I once worked on a project for another general contractor who didn't pay me because his company filed for bankruptcy. Even though bankruptcy laws protect the filer from their creditors, bond money posted is not considered an asset. Therefore, payment must be made, providing the amount owed is not more than the amount of the bond posted.

Talk to your insurance agent about your plans to get into remodeling. Your liability will be changing as well as your policy. This is a step to take before contracting the first project, not during.

Subcontractors
Most custom woodworkers have worked as a subcontractor. You should be pretty familiar with the drill; the general contractor establishes the schedule and you do your best to accommodate. Getting into remodeling as the conductor means you will be establishing the schedule. Perhaps you won't need any subs, but when you do, you need to have a plan on how to best utilize and manage them.

Managing subcontractors takes time. You must charge for your coordination services. The most common way to do this is to charge a percentage of their contract price. This works for most situations, but sometimes you may need to charge a flat management fee. Even the best subcontractors will need your direction. As the saying goes, "Too many cooks in the kitchen spoil the broth."

Legal issues
Every business should receive legal advice to help them better manage their business. Be sure to check with your attorney if you change your business plan. His or her advice can go a long way in helping you avoid pitfalls and the transition to a different market.

If your company is not already incorporated, this may be a good time to consider taking that step. Because remodeling is a high-risk industry, you do not want that liability directly resting on your personal shoulders. Get your attorney's advice. A professional once told me that incorporation is vital for when, not if, you get sued.