When you hear or read the term, “artisan contractor,” what do you think of?

Don’t search it, and if you deal with artisan contractors, don’t shout out the answer. I can tell you that I thought of custom cabinet makers and carpenters who do intricate woodwork that reminds you of the artists of generations past. It turns out that artisan contractor is a term for any contractor that does specific construction work.

According to several insurance company websites, an artisan contractor is any business with skilled workers who do work on customers’ premises. One insurance company lists tree surgeons, piano tuners and handypersons as artisan contractors. The piano tuner made sense to me because I’ve watched a professional piano tuner at work and it is amazing, especially when he finishes the tuning job and tries out the piano.

Back to the point. An artisan contractor is any skilled worker (or team of workers) that is called to a location to do a specific job. Some insurance companies add general contractors to this list, but for our purposes, let’s consider the small, artisan contractor who may have a few employees, including his little sister – hired so she can save some money over the summer.

What are the unique risks of an artisan contractor?

The nature of an artisan contractor is such that they likely have little to no premises liability. The exception to that might be if they invite clients to their shop to look at some of the work that they are working on, or to consult on a job for the client. Otherwise, we are considering their premises exposure to be essentially nil. That brings us back to the question, what are some of the unique risks of an artisan contractor?

Unfamiliar Locations

Our definition tells us that the contractor goes to someone else’s premises, so the contractor will have to deal with the risks associated with being at a new location for each job. The fact of a new location brings risk with it. The contractor does not know what will be at the location. There may be an animal that doesn’t like contractors. There may be a homeowner that looms over him asking questions and checking each step of the work.

Another risk associated with a new location could be finding it. You would be surprised how easy it is for someone to get lost trying to get to where the work is. We have had several contractors and delivery drivers get lost trying to get to our home. It is common for us to get a phone call from someone about five minutes before they are scheduled to arrive at my house, asking where the house is. Usually, they followed incomplete GPS directions that took them to another county.

Labor Issues

Small contractors do jobs that range from the very simple to the very skillful and when the contractor is a solo entepreneur, labor issues are easy. The contractor does the work and doesn’t have to worry about the quality. It will be the quality of work that the contractor is generally comfortable with. The problems arise when the contractor needs to hire other people to do some of the work.

There is the risk of not hiring. By not hiring anyone, the contractor limits themselves to the work they can do. Depending on the work that needs to be done, travel time, and other obligations, a contractor can reasonably expect to be able to put in eight to 12 hours of work in a day, which seems significant, but it’s only one person working.

Hiring can create risks for the contractor, as well. An inexperienced worker might create some cost savings but does not effectively multiply the efforts of the contractor. It takes time to learn how to do this contractor’s work well, whether they are a plumber, a tree surgeon or a piano tuner. The contractor has a time multiplier in an experienced employee if the employee stays and grows in her skills.

Hiring also creates the risk of having to repair work that was improperly done. The contractor may feel comfortable with the skill level of the employee and let them do part of a job unsupervised. For instance, a contractor that did some work for us let his brother do some painting. When that painting was not done well, the contractor found himself returning to my house to get the work done correctly. That was time spent that did not return any revenue and it came at a cost.

Material Protection

Imagine the smallest, boxiest car you can think of and then imagine it pulling a small trailer behind it. That is the vehicle that a contractor friend uses.

In that little trailer is every tool that he thinks he might possibly need for the different job sites that he will visit over the next few days because he doesn’t want to load and unload his car every day.

He doesn’t keep anything expensive in the trailer, unless he is taking it directly to a job site because of the risk of it being stolen or lost. As a small contractor, he often buys materials as he needs them because it’s too expensive and risky to try and store those materials long term. Of course, since his risk management technique is to buy the materials that he needs when he needs them, he doesn’t often see much price reduction and he loses productive time when he has to buy materials on the way to the jobsite. Or when he discovers that he doesn’t have something that he needs, he loses time because he has to stop and go to the hardware store.

The Insurance Angle

You’re thinking to yourself – this doesn’t seem to be insurance related – but risk is bigger than insurance. Some of these risks that the small contractor faces are insurable, and others are not. Some are insurable but the cost of insurance can be prohibitive for the small contractor.

The contractor can buy CGL that should cover any liability exposures related to the operations, products, and completed operations. There are auto policies available to cover the exposure of driving to wherever the work is located. There are inland marine policies available for any mobile equipment, portable tools, and more.

But insurance is only a small part of an overall risk management strategy, program, or mindset. Additionally, those risks that the small contractor faces that aren’t insurable don’t just disappear because there is no insurance for them. The contractor makes risk management decisions, often based on little more than a reaction.

It’s our job to help professionals learn about the risks that they face and how they can deal with them.

Patrick Wraight

Patrick Wraight, CIC, CRM, AU, is director of Insurance Journal's Academy of Insurance. He can be reached at pwraight@ijacademy.com.