Beware of the Suit – The Importance of Contracts Prior to Starting Work

contract-insurance

Contracts are a must when it comes to starting a regular service, repair or construction projects. Ask any lawyer, they are the foundation of your business and critical to ensure all parties are agreeing to the same terms. Nearly all of the lawsuits and/or insurance claims against our insured’s could have been avoided or at minimum mitigated with a contract in place prior to starting the work.

Here are some examples and tips for both service and one-off repair or construction projects.

Regular Service – Your business will be providing services on a regular basis to an individual

  • Service is a bit tricky because there isn’t an actual product that you’re selling, often it’s subjective. That’s why it’s so important to lay out a standard service agreement prior to commencing work. Clearly defining what to expect as part of signing up with your company.
  • Services provided – clean, brush, chems, filter clean, filter replacements
  • Monthly cost of those services – $150
  • How often to expect those services – weekly service includes clean, brush, chems and filter cleaning. Filter Replacement as needed or every 1-2 years
  • When to expect service – Weekly each Wednesday
  • When you should not expect service – Week of Thanksgiving and the week between Christmas and new years
  • When will you bill – 20th of every month
  • When are bills due – by the 1st of the month following the bill
  • Late payments applied – payment received past the 10th of each month
  • Late Payment amount – $15

If you ever agree to perform work outside of what is listed in your service agreement, you should have a separate but similar agreement signed. For instance a drained pool, acid-wash or tile cleaning should all have separate waivers since it’s outside the scope of your regular agreement. These should include indemnity and hold harmless agreements which relieve your company of liability if something happens outside of your control while the pool is drained.

A pre-service inspection report prior to commencing the job is a must, that way you aren’t blamed for any existing damages or potential injuries down the road. Always keep an eye out for new potential hazards on your weekly service trips. A surprisingly common occurrence is lighting hung over a pool that was not installed by an electrician and isn’t on GFI. Get it identified and make a recommendation in writing after you speak to the customer. Continue to make the recommendation, send an email each time and keep all them saved including the responses.

The world is sue-happy, don’t let someone take advantage of your company to get a free remodel or re-surface done. Even worse, don’t get the blame for a serious injury that could have been avoided.

One Time Equipment Repair, Install, Remodel or Construction Projects

These jobs should be spelled out in the bid that’s accepted. Be detailed when describing the costs of the job, the time frame until completion, the specs the customer agreed to, the colors, the type of equipment, the type of materials, etc…again the philosophy here is to make sure both parties know exactly what they’re agreeing to.

The one big mistake often made is when there’s a change to the plan. It happens frequently that the customer may come back around and say they’d like something done differently or in addition to what was agreed to on the contract. Get a change order every time and have it signed! When it comes to he said/she said between a consumer and a company/contractor in the court system the company will likely lose.

This will save your company time and money when you’re accused of installing the wrong tile, the wrong color surface or the wrong brand of pool equipment.

These are just examples of what you can include but be sure to customize these contracts suit the needs of your business. Mostly just don’t go without a contract, otherwise it’ll likely be you footing the bill for your insurance deductible, increased premiums for the next 5 years or out of pocket expense to re-do the work.

Pat Grignon
Vice President
Inszone Insurance Services, Inc.
(p) (916) 503-6359
(e) pgrignon@inszoneins.com