CSLB Contractor's Law & Business Practice Exam

If an employee incorrectly sets a cabinet that damages the client's countertop, what is the best course of action?

1. Require the employee to pay for the damage

2. Claim the damage on your general liability insurance policy

3. Tell the client to use their homeowner's insurance

4. No action is required, as the client assumes the risk

The correct answer is: Claim the damage on your general liability insurance policy

Claiming the damage on your general liability insurance policy is the best course of action in this scenario. General liability insurance is specifically designed to protect businesses from financial loss due to accidents that occur as part of their operations, including property damage caused by employees while on a job site. By filing a claim, you ensure that the cost of repairing or replacing the damaged countertop is covered, which also maintains a good relationship with the client. This approach shows professionalism and accountability, signaling to the client that you take responsibility for your employees' actions. Other options, such as requiring the employee to pay for the damage, may not be legally enforceable and could create distrust or dissatisfaction among your workforce. Advising the client to use their homeowner's insurance shifts the burden of the incident onto them, which could upset the client and damage your reputation. Asserting that no action is required assumes the client is aware of and willing to accept the risk of the employee's mistake, which is unlikely to foster a positive business relationship. Thus, utilizing your general liability insurance offers a responsible and effective resolution to the issue.