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Protecting Your Construction Company from Malpractice Claims

Californian construction companies can face a host of potential risks related to malpractice claims, ranging from design flaws, construction work defects, negligence claims, and material defects. Not only are there financial repercussions for a malpractice claim, construction companies facing lawsuits suffer reputational harm when engaging future clients.

To protect your company from financial and reputational loss and harm, construction companies must ensure they have sufficient coverage in malpractice protection policies.

Insure What Matters Most to Your Business

One of the most crucial business expenses for your California construction company’s protection is professional liability insurance. These insurance policies provide coverage against malpractice claims citing negligence, errors, omissions, and defects in work or materials, and assist with legal defense expenses in case a lawsuit is brought against your company. 

A good insurance broker will discuss what kind of work your construction company performs and what risks you face to tailor your policy and coverage specifically for your company to provide optimal coverage.

Manage Your Risk to Manage Your Potential Issues

Another key component of mitigating malpractice risk and enhancing your construction company’s protection is a risk management plan.

A comprehensive risk management plan will identify any possible risks or dangers and what measures need to be taken to minimize or eliminate them.

This risk management plan can include regular job site inspections, quality checks of materials, equipment, and work, or continuing education for employees and contractors on safety protocols.

Part of quality risk management is comprehensive record keeping. In order to minimize your malpractice risk, records should be maintained that detail any and all changes made during the course of the building process, trainings that the employees have undergone, and any issues that have been noticed and rectified. For every project, your construction company should have complete records of every aspect of that project from beginning to end.

A Malpractice Claim Has Been Filed, Now What?

A quick, efficient, and transparent response to any malpractice claims that do appear is essential to mitigating and repairing any reputational damage that might occur.

In addition to reassuring stakeholders, investors, or other owners in the construction company, a swift and transparent response to a malpractice claim shows current and future clients that a company is willing to rectify any errors and make things right for its clients and company.

There are also statutory and regulatory requirements regarding malpractice coverage and response for construction companies in California, and as a licensed and bonded company, all firms must be aware of these requirements. If you fail to comply with them, not only are there the aforementioned reputational and financial damages, there are legal ramifications that can result in suspended business activities or substantial fines.

Protect Your Company, Your Investors, and Your Clients

Proactively seek information and education on malpractice protection with your insurance company and your legal team to keep abreast of legal and regulatory changes that might affect your business.

Seminars and workshops on risk management and industry networking events are also valuable sources of information and resources on protecting your company and investors in malpractice situations.

Taking proactive steps to minimize risks when it comes to potential malpractice claims will help you avoid financial, reputational, and legal damage. Risk management plans and professional liability insurance along with continuing education of industry and regulatory changes will allow your construction company to operate with greater certainty while continuing to provide your clients with exceptional building services.