Financial, Asset Protection, Risk Transfer (FAR)

If you are involved with the construction industry, you are probably reading this going, “What is Financial, Asset Protection, Risk Transfer (FAR)?” Well, let me answer that for you right now.

Assisting contractors nationwide, I have found there are three common areas of concern for contractors. Those areas are:  Financial, Asset Protection and Risk Transfer. The Financial concern is the challenge to win more projects.  Within Asset Protection comes the concern of, “Do I have the proper insurance coverage for all aspects of my business?”  And the third concern, Risk Transfer, is the transferring of risk to a third party effectively.

If you are facing these challenges and they are causing you to lose sleep, don’t worry; you can sleep again.

For the challenge of winning additional projects competitively, look at your commercial insurance program to free up cash flow. Rates are always going to be an issue, but a premium savings of 30% to 40% is not unrealistic when looking at non-traditional programs where you “put some skin in the game”.

Let’s look at protecting your company from an unforeseen claim that is not covered by insurance. Take a step back.  Instead of the typical process of giving out loss runs, payrolls and revenues, talk to a broker who specializes in construction insurance.  Discuss current operations and future plans so a proper insurance program can be customized to fit your company’s needs.  If he or she does not ask you about your concerns, then move on to another broker.

The remaining issue is transferring risk to a third party effectively. Nobody wants to be left with faulty work done by others on your behalf.  You should:  (1) have a sub-contractor agreement that has been reviewed by an attorney and an insurance broker who specializes in construction, and (2) make sure the subs are providing certificates of insurance, copies of required endorsements and currently valued loss runs.

If you would like to talk further about these challenges, I’d be happy to share how we assist other contractors with ways to manage these concerns and improve cash flow. Contact me, Chris Warren, by email at or by telephone at 301-948-5800, ext. 143.

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