Building Your Own Home: What is the Liability?

Framing a Roof

In a recent post, Owner Building: Risks vs. Rewards, we talked about the specific risks you’re exposed to when building your own home.  One of the risks we talked about was the liability associated with the project.  The truth is, the building process is dangerous.  A perfect example of this is the home builder in Hawaii that recently had a death on one of his new home construction sites.

One of the builder’s employees was fatally injured when he fell while working on a two story roof.  The Hawaii Department of Labor and Industrial Relations fined the builder $38k for violating five safety and health requirements.  The state investigation determined the employees and supervisor failed to install fall protection while working on a roof.  This fine is most likely only the beginning…I’m sure there will be other lawsuits involved that will far surpass the fines.  When building your own home, your are exposed to this same type of liability.

Besides falls, what other types of accidents are possible on your new home site when building your own home?  Trench cave-ins…Hands getting cut by power saws…Pneumatic nail guns shooting nails into hands and feet (I had a carpenter nail his foot to the floor once). Drills cutting through skin.  Flying objects embedded into eyes and skin.  Falling objects landing on people.  These are just a few of the things I have experienced.  I am not trying to scare you…I just want you to know what the risks are so you can properly protect yourself and people visiting your job site.

What can you do to limit your exposure to these types of liabilities when building your own home?  The good news is there are several good ways to limit your exposure.  Let’s discuss a few of them.

Subcontracts:  Make sure you have language in your contracts stating the subcontractor is responsible for complying with all OSHA regulations.  This could also include a statement that the subcontractor is to provide all necessary safety equipment and safety training for its employees.  The company you are hiring for a given task should be experts at what they do.  This means they should have knowledge of how to perform their specific task safely.  From employee training to providing the proper safety equipment, they are the experts at what they do.  You will also want to make sure your subcontract specifies what insurance your subcontractor must keep. You really can’t be too careful when building your own home.

Insurance:  We have talked about this in detail before in our post title Insurance During and After Construction so you might want to go back and read this.  The coverage that should take care of you in case of an injury on your job site is your general liability insurance.  So, you should always make sure you have plenty of coverage when building your own home.  Your insurance carrier will most likely want your subcontractors to list you as an additional insured on their policy.  Your insurance agent should be able to give you the coverage amounts needed.

Attorney:  Have your attorney review your subcontract and insurance coverage to make sure you are properly covered.  You might want to discuss with your attorney the idea of setting up an entity to put the lot and build out under…like an LLC.  This might help to further limit your exposure when building your own home.

Job Site Inspections:  You or your builder consultant should do routine safety inspections looking for anything on the property that might be a hazard.  For more guidance and help on safety, check out the U.S. Department of Labor site covering OSHA and the residential construction industry.  Safety inspections should be a daily ritual when building your own home.

Hopefully we haven’t scared you.  The intent here is to wake you up to the realities of construction and help you properly prepare for the worst…just in case.  If you take the proper precautions, you should be able to protect yourself when building your own home.

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