Page 9 - Marwood E-Book
P. 9

                                      Contracts / Scope of Work / Insurance

               I always recommend regardless of the size of the project, that both parties develop a
               comprehensive and detailed scope of work, a contract of substance and furnish the
               homeowner a certificate of insurance as name insured. This agreement should clearly
               address such matters as payment schedule, allowance schedules, work schedules and the
               conditions and consequences for non performance and disputes.

               It is very important that your GC have liability insurance, builders risk insurance and
               workers compensation (or waivers) if facilitating a major renovation. The State of Texas
               does not require general contractors to maintain insurance. This means if there is a gap in
               the insurance coverage of the GC 's insurance, the liability of an unanticipated event could
               come back on your insurance company or worse you personally.

                 A brief word about undisclosed (covered
                 up) defects.  This is an issue that causes
                 many disputes and hard feelings between
                 GC and homeowners. The covered
                 unknown is part of the remodeling and
                 restoration process. These conditions
                 usually result from the GC not being able
                 to visually see a defect in the original
                 covered area that could not be
                 anticipated as part of the original scope
                 of work. The procedure of these
                 conditions should be discussed in detail
                 with the GC prior to hiring. In addition, it
                 is always wise to maintain a reasonable
                 financial contingency reserve for these
                 unwanted surprises. The amount
                 depends of the size of the project and age
                 of the property. The larger and older the

                 home, the larger the reserve contingency.

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