Trade contractors facing challenges from Covid 19

As the residents of Northeast Ohio reevaluate their life styles since Covid-19 hit, trade contractors have had many opportunities to grow their businesses. However, like many other businesses, they are facing new challenges.

Labor shortages are hitting trade contractors. Employees have had to increase pay to keep employees and are paying higher entry level wages to attract new workers to the industry. This will affect the liability exposures that most trade contractors have their General Liability insurance based on.

Most General Liability policies are auditable and are based on payroll. In Ohio, your Worker’s Compensation is usually underwritten by the State and the increase in payroll will increase your Worker’s Compensation premium. With these premium increases on the horizon, profitability on quoted jobs could be negatively impacted and pricing on future quotes needs to be adjusted so profit margins are not affected.

Trade Contractors are not exempt from supply chain issues. When Covid-19 hit, people reassessed their lifestyle and wanted to invest in their homes, and in many cases move to more rural areas. At the start of Covid-19, many mills and factories were shut down as not being considered essential businesses. Once things started to open up, some factories had stock, but had to recruit drivers (at higher wages) so products were stuck at factories and warehouses.

Products that were not on hand or came from overseas are still being adversely affected by supply chain issues as container ships sit off the coast of the United States. Some trade contractors have a delay of project clause in their contracts with their clients or general contractors. If the supply chain issues are not being addressed as new contracts are drafted, profit margins can once again be affected.

Inflation, whether from labor costs, costs of goods sold or increasing fuel cost even if transitory, must be taken into account as you continue to operate your contracting business. So, before you renew your insurance policy call the Trusted Choice Insurance agents at Richey-Barrett Insurance.