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Risks That Owner-Builders Should Know

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Owner-Builder Risks

Risks That Owner-Builders Should Know

Known Risks of Being an Owner-Builder

Have you just bought the perfect piece of land? Are you ready to build your dream home? Most people will use a licensed general contractor to build their home from the ground up. However, some people – those who wish to be an ‘owner-builder’ or ‘owner-subcontractor’ – will plan to physically build the house themselves. While this is quite an adventure, owner-builders should be aware of the risks that they take on board.

The role of an owner-builder can vary dramatically. A skilled person who chooses to be an owner-builder could build everything themselves. However, more often than not, an owner-builder shares some of the work with a contractor in some capacity. Others want to exclude general contractors altogether and, instead, work directly with skilled trade subcontractors who do the actual field work.

Unless you are knowledgeable about construction, mistakes can be costly and take additional time to repair or correct. Subcontractors and suppliers who are not paid on schedule may file mechanics liens against your property, putting your home in jeopardy.

Building a home is no small feat, and accidents happen. If your workers are injured or your subcontractors are not licensed or don’t carry liability insurance, you could be asked to pay for injuries and rehabilitation through your homeowners insurance policy. If your home insurance doesn’t cover the total sum of expenses, you may be left to pay out of pocket.

Always be cautious of unlicensed individuals who claim to be skilled contractors. They could promise to guide you through the owner-builder process for a consulting fee, but they could be breaking the law.

Remember, as an owner-builder, you take on full responsibility for all phases of your project and its integrity. Licensed contractors must demonstrate knowledge of their craft, be tested, fingerprinted, and undergo an FBI background check before they are licensed to work in California. If they do not go through this process, the owner-builder may reap the negative consequences.

Talk with your insurance agent if you’re unsure about where to begin with insurance coverage. The team at Little & Sons Insurance Services in Banning, California can help! Contact us today to get started on securing reliable coverage.


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