Small Business Insurance Basics

Insurers often combine a number of insurance coverages into a package that is sold as a single contract. The most common policy for small businesses is the Businessowners Policy (BOP).

The BOP combines coverage for all major property and liability insurance risks as well as many additional coverages into one package policy suitable for most small businesses. The term “BOP” specifically refers to insurance policy language developed (and revised as needed) by experts at ISO. ISO provides sample insurance policy language, research and a variety of other products to insurance companies.

The BOP includes business income insurance, sometimes called business interruption insurance. This compensates a business owner for income lost following a disaster. Disasters typically disrupt operations and may force a business to vacate its premises. Business income insurance also covers the extra expense that may be incurred if a business must operate out of a temporary location.

To cover specific risks associated with a business, a variety of additional coverages may be added to the basic BOP. For example, if a business has an outdoor sign, the BOP doesn’t cover it unless coverage is specifically added for an additional premium. If a business relies on electronic commerce, the owner can add coverage for lost income and extra expenses in the event the ability of the business to conduct e-commerce is slowed down or stopped due to a computer virus or hacker.

Only small- to medium-sized businesses that meet certain criteria are eligible for a BOP. Factors insurers consider include the size of the premises, the required limits of liability, the type of business and the extent of offsite activity. Premiums for BOP policies are based on those factors plus business location, financial stability, building construction, security features and fire hazards.

Major Coverages

Most small businesses need to purchase at least the following four types of insurance.

1. Property Insurance

Property insurance compensates a business if the property used in the business is lost or damaged as the result of various types of common perils, such as fire or theft. Property insurance covers not just a building or structure but also what insurers refer to as personal property, meaning office furnishings, inventory, raw materials, machinery, computers and other items vital to a business’s operations. Depending on the type of policy, property insurance may include coverage for equipment breakdown, removal of debris after a fire or other destructive event, some types of water damage and other losses.

2. Liability Insurance

Any enterprise can be sued. Customers may claim that the business caused them harm as the result of, for example, a defective product, an error in a service or disregard for another person’s property. Or a claimant may allege that the business created a hazardous environment. Liability insurance pays damages for which the business is found liable, up to the policy limits, as well as attorneys’ fees and other legal defense expenses. It also pays the medical bills of any people injured by, or on the premises of, the business.

3. Business Auto Insurance

A business auto policy provides coverage for autos owned by a business. The insurance pays any costs to third parties resulting from bodily injury or property damage for which the business is legally liable, up to the policy limits.

4. Workers Compensation Insurance

In all states but Texas an employer must have workers compensation insurance when there are more than a certain number of employees, varying from three to five, depending on the state. Workers comp insurance, as this coverage is generally called, pays for medical care and replaces a portion of lost wages for an employee who is injured in the course of employment, regardless of who was at fault for the injury. When a worker dies as a result of injuries sustained while working, the insurance provides compensation to the employee’s family. An extremely small business, such as one operated by one or two people out of a home, may not need workers compensation insurance. But it often needs more property and liability insurance than is provided in a typical homeowners policy. 

Other Types of Business Coverages 

1. Errors and Omissions Insurance/Professional Liability

Some businesses involve services such as giving advice, making recommendations, designing things, providing physical care or representing the needs of others, which can lead to being sued by customers, clients or patients claiming that the business’s failure to perform a job properly has injured them. Errors and omissions or professional liability insurance covers these situations. The policy will pay any judgment for which the insured is legally liable, up to the policy limit. It also provides legal defense costs, even when there has been no wrongdoing.

2. Employment Practices Liability Insurance

Employment practices liability insurance covers (up to the policy limits) damages for which an employer is legally liable such as violating an employee’s civil or other legal rights. In addition to paying a judgment for which the insured is liable, it also provides legal defense costs, which can be substantial even when there has been no wrongdoing.

3. Directors and Officers Liability Insurance

Directors and officers liability insurance protects directors and officers of corporations or not-for-profit organizations if there is a lawsuit claiming they managed the business or organization without proper regard for the rights of others. The policy will pay any judgment for which the insured is legally liable, up to the policy limit. It also provides for legal defense costs, even where there has been no wrongdoing.

4. Key Employee Insurance

Life or disability income insurance can compensate a business when certain key employees die or become disabled. These coverages cushion some of the adverse financial impact that results from losing a key employee’s participation.

5. Umbrella Policies

As the name implies, an umbrella liability policy provides coverage over and above a business’s other liability coverages. It is designed to protect against unusually high losses. It provides protection when the policy limits of one of the underlying policies have been used up. For a typical business, the umbrella policy would provide protection beyond the general liability and auto liability policies. If a company has employment practices liability insurance, directors and officers liability, or other types of liability insurance, the umbrella could provide protection beyond those policy limits as well.

State Unemployment Insurance Benefits

Purpose

The Federal-State Unemployment Insurance Program provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined under State law), and meet other eligibility requirements of State law.

• Unemployment insurance payments (benefits) are intended to provide temporary financial assistance to unemployed workers who meet the requirements of State law.
• Each State administers a separate unemployment insurance program within guidelines established by Federal law.
• Eligibility for unemployment insurance, benefit amounts and the length of time benefits are available are determined by the State law under which unemployment insurance claims are established.
• In the majority of States, benefit funding is based solely on a tax imposed on employers. (Three (3) States require minimal employee contributions.)
• For additional information, click here.

Eligibility

1. You must meet the State requirements for wages earned or time worked during an established period of time referred to as a "base period". (In most States, this is usually the first four out of the last five completed calendar quarters prior to the time that your claim is filed.)
2. You must be determined to be unemployed through no fault of your own (determined under State law), and meet other eligibility requirments of State law.

Filing a Claim

• You should contact the State Unemployment Insurance agency as soon as possible after becoming unemployed. In some States, you can now file a claim by telephone or over the Internet.
• When you file a claim, you will be asked for certain information, such as addresses and dates of your former employment. To make sure your claim is not delayed, be sure to give complete and correct information.
• Generally, you should file your claim with the state where you worked. If you worked in a state other than the one where you now live or if you worked in multiple states, the state UI agency where you now live can provide information about how to file your claim with other states. You may also click on the link above to find contact information for all states.
• It generally takes two to three weeks after you file your claim to receive your first benefit check. Some States require a one-week waiting period; therefore, the second week claimed is the first week of payment, if you are otherwise eligible.

Continued Eligibility

• You must file weekly or biweekly claims (after the week(s) has ended), and respond to questions concerning your continued eligibility. You must report any earnings from work you had during the week(s). You must also report any job offers or refusal of work during the week. These claims are usually filed by mail or telephone; the State will provide filing instructions.
• When directed, you must report to your local Unemployment Insurance Claims Office or One-Stop/Employment Service Office on the day and at the time you are scheduled to do so. If you fail to report as scheduled for any interview, benefits may be denied.
• You must continue to meet the eligibility requirements stated in the previous section.

Registering For Work

• Claimants who file for unemployment benefits may be directed to register for work with the State Employment Service, so it can assist you in finding employment. If you are not required to register, you still may seek help in finding a job from the Employment Service.
• The One-Stop/Employment Service Office has current labor market information and provides a wide array of re-employment services free of charge.
• Employment Service staff can refer you to job openings in your area, or in other parts of the State or country if you are willing to relocate.
• They can refer you to various training programs.
• If job openings in your field are limited, they can offer testing and counseling to determine other jobs you might like to do and are able to do.
• If you believe you have special needs or considerations, such as physical needs or other considerations, which may prevent you from getting a job, they can refer you to other agencies for help with those needs.

Disqualification from Eligibility

• If your reason for separation from your last job is due to some reason other than a "lack of work" - a determination will be made about whether you are eligible for benefits.
• Generally all determinations of whether or not a person is eligible for benefits are made by the appropriate State under its law or applicable federal laws.
• If you are disqualified/denied benefits, you have the right to file an appeal. The State will advise you of your appeal rights. You must file your appeal within an established time frame. Your employer may also appeal a determination if he/she does not agree with the State's determination regarding your eligibility.
• If you've received a determination denying benefits, click here.

Benefits

• In general, benefits are based on a percentage of an individual's earnings over a recent 52-week period - up to a State maximum amount.
• Benefits can be paid for a maximum of 26 weeks in most States.
• Additional weeks of benefits may be available during times of high unemployment (see Extended Benefits). Some States provide additional benefits for specific purposes.
• Benefits are subject to Federal income taxes and must be reported on your Federal income tax return. You may elect to have the tax withheld by the State Unemployment Insurance agency.

How to Build a House

Finding a LocationDesigning Your HomeGetting the Necessary PermitsBreaking GroundBuilding the Walls and RoofStarting on the InteriorInstalling the Essentials

Edited by MA, BR, Tom Viren, Jack Herrick and 58 others

Building your dream home can be one of the most exciting and rewarding projects you can undertake. Getting the opportunity to plan out each step of the process and make the decisions about your building project is a big responsibility, and can be overwhelming for even the most experienced do-it-yourselfers. Taking the scope of the project into account before you get started can help make the process go a lot more smoothly. Learn the proper ways to find the right location, design your home, acquire the correct permits, and start breaking ground. See Step 1 to learn how to get started building your own house.

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Part 1 of 7: Finding a Location

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   Select a desirable place for your house. There are many factors to consider when finding a suitable location on which to build your home. Think about a place you'd like to live long-term and keep in mind things like:
   • Climate. Special considerations must be made for building in flood, hurricane, intense heat, frigid cold, and other extreme weather and climatic conditions.
   • Ground stability. Houses built on shifting sand, mucky soil, or other unstable earth will likely fail over a short period of time unless they are built on special foundations or pilings.
   • Availability of utilities. If you intend to have electric power, potable water, telephone, and other conveniences, make sure these utility providers offer them at your location.
   • Community infrastructure. If you plan to raise children, make sure good quality schools are available. Check to see if you are in a police jurisdiction to protect you from crime, look at the distance you will have to travel to acquire basic commodities, and whether medical help is nearby.
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   Select the property on which you are going to build and purchase it. This may be a hurdle, depending on the cost, and your available funds. Building a house is an expensive process, but purchasing suitable property is also a major investment just as important as homebuilding. Decide how you're going to pay for your building project going forward and start that process with the land.
   • Some homebuilders will elect to get a construction loan to purchase the land and secure funding for the building project. This requires that you enter into a contract with a builder or a contractor, and the loan must reference that builder's resume and serve as a contract between you and the builder, as well as a source of funding for the project. To do this, you'll need to wait until you've hired and vetted a builder before purchasing the land.^[1]
3. 3
   Have the property surveyed and the footprint of the house located. This is not absolutely necessary, especially if you are building on a large parcel of land, but if there is any doubt about the property lines, have this done to assure you are not encroaching on a neighbor's property, or the city's. This will be useful as you move forward with the building process.^[2]
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   Consider access issues. On large parcels, especially, you will need to ascertain the route for a usable driveway if you depend on a car for transportation. Look at any low area that would become impassable in winter mud or heavy summer rain, how installing driveway will effect the landscape, and whether a driveway will be in conflict with underground utilities.
   • Pay particular attention to the way surface water will drain off the property. Every effort should be made so that water drains off and away from the driveway. This may require the placement of culverts or pipes under the driveway to avoid puddling along its sides.

Part 2 of 7: Designing Your Home

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   Design your own home, or consult an architect. Architects and engineers have special training and years of experience in designing houses, and are necessary for most building and zoning jurisdiction code requirements. Regardless of whether you contract their services or elect to design your own, the house you build will be built for you, so you should be involved closely in the design process.
   • Before you hire or consult an architect, find out what management services the firm may or may not provide. Some architecture firms will help hire contractors they know and trust, as well as consult and inspect the contractor's work as it progresses, making necessary revisions and additions as the work progresses. This can be a significant headache relief in the process.^[3]
   • Before building, you'll need to submit plans to the city or county building commission for approval. Unless you're an experienced architect, it'll be very difficult to produce the necessary to-scale production drawings and engineering specs necessary for approval. To save time, energy, and money, it's recommended that you consult a professional and work along side them to design the home you want.
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   Design the living spaces. The fun part of designing a home is imagining your new life in your new space. Spend some time researching pre-drawn floor plans for inspiration and consider using them as a guide for your own space. Homebuilding guides are commonly available for free online.^[4] Give lots of thought to what kind of rooms you want, the number of bedrooms that will be necessary for your family, and what sort of a style you want in the rooms you'll be spending the most time in.
   • Bedrooms: For a family house where the possibility of additions exists, remember it is simpler to add a room during initial construction than to remodel or build an addition later. If you only need 2 bedrooms at present, an extra room might be used for an office, storage, or even left unfinished and unfurnished until such time as it is needed.
   • Bathrooms: In practical terms, one bathroom can suffice in almost any circumstances, but if the house is for multiple people, two makes life much easier. Having two or more bathrooms will also increase the resale value in the convenience minded home buyer's mind.
   • Special function rooms: Consider if your lifestyle requires rooms suitable for special functions, such as formal dining, office space, a den, or a play room.
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   Design the utility areas with an eye toward function. For family life, having a laundry room, and possibly even a garage can be a real help in managing day to day chores. Planning out the necessary house-running spaces is a critical part of the design process. It's also important to design them to be as easy-to-wire and outfit with plumbing as possible, making it important to consult an architectural engineer when designing the home. Carefully design your:
   • Kitchen
   • Garage
   • Laundry room
   • Storage areas
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   Place windows with the maximum energy efficiency in mind. Part aesthetics and part energy-efficiency, designing your home with an eye toward sunlight will ensure that your home stays full of warm radiant light when it needs it the most. If you are building a home with large windows in a living room, consider facing these toward the most appealing view and at an angle that maximizes the natural lighting when you'll want it most.^[5]
   • Kitchens may benefit the most from exterior light, so think about what time a ray of sunshine in the kitchen will offer the best results. Late afternoon may be cooking and dish washing time, so it may be best to orient the kitchen towards the west to take advantage. Larger windows on the south face of your house will also help heat the house through solar gain in colder climates.
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   Prepare to tackle water drainage issues with the proper design. Be aware of how surface water (rain, snow melt, drainage from seasonal springs) moves across the building site. It is critical to keep water away from your home, especially in colder climates. Freezing pipes and foundation damage can result from a failure to plan at this stage. You want to keep your basement dry and lessen the chance that you will have damp wood, which invites termites in any climate. Simple swales or grassy ditches will go a long way in controlling surface water drainage.

Part 3 of 7: Getting the Necessary Permits

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   Secure a construction loan. If you haven't already started this process when securing the land, you'll need to figure out a way to fund the project and a construction loan is the most recommended method of doing so. Apply for a construction loan by filling out a loan application, called a 1003, and submitting it to a loan officer along with a credit report.^[6] The completed loan application will need to include information like:
   • The type of loan requested
   • The amount of money requested
   • Your current living situation
   • Your social security number
   • W-2 info
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   Get construction insurance. To engage in a homebuilding project, you'll need three types of construction-related insurance, some of which may be provided by the builder, some of which won't, depending on the state you live in and the nature of the contract you've signed. Typically, it's required that you provide:
   • Course of Construction Insurance to cover against unforeseen loss including damages from fire, accident, vandalism and malicious mischief.
   • General Liability Insurance is sometimes provided by the builder and sometimes not. It is a comprehensive liability coverage against accident on the workplace. You should only hire builders who provide this insurance themselves, as it can be quite expensive and could be indicative of shoddy workmanship if a builder doesn't provide it.
   • Workman's Compensation Insurance is necessary if your builder hires their own workers. If the work is subcontracted (a common practice) you'll need to provide workman's comp and the builder must write a letter acknowledging that they do not have employees and will not provide compensation.
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   Secure the proper construction permits. A building permit is a basic requirement in many areas, particularly for permanent construction. To obtain this, you'll need to provide detailed architectural diagrams, engineering load specs, and other materials to your state's Department of Housing.^[7] It's likely you'll also need the following to comply with local codes and zoning requirements by obtaining:
   • A septic tank permit
   • An electrical permit
   • A plumbing permit
   • A mechanical (HVAC, or air conditioning) permit
   • You may also find you are required to apply for and receive an environmental and/or impact permit. Having the house location marked prior to obtaining your permits will help to work details out in the environmental permitting process.
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   Prepare an Estimated Cost Breakdown (ECB). This is the breakdown of each particular cost of construction of the home. The foundation, lumber, framing, plumbing, heating, electrical, painting, and builder's profit, etc. When you hire a builder, they will usually complete this form to show you exactly what it will cost to build your new home.
   • Price building materials in the area. How much is the cost of wood in the prospective area? Labor? Vinyl? It's helpful to give some though to how much the process will end up costing, aside from the land purchase itself. Try and get a rough estimate of how much it'll cost to build the kind of house you want to build at the location you're considering.
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   Decide how much of the actual construction you will do yourself. Building a house involves several specific trades to ensure quality work, so it is usually better to have trained craftsmen perform things you're unable to do at an expert-level. You can probably paint the house and put up drywall yourself, but maybe you want to hire those jobs out. Try and find an economic and practical balance between doing projects yourself to save money and hiring out more intricate and difficult work. Consider hiring out:
   • Siteworkers to clear and grade the land, prepping it for building
   • Bricklayers to lay the foundation
   • Framers to perform rough carpentry, frame up the walls, and install the trusses or stick-framed rafters
   • Roofers to install the roof and insulate the house
   • Electricians, plumbers, and HVAC workers to do the difficult interior work of outfitting the home for living
   • Trim and finish carpenters for interior design work
   • Flooring installers to lay the carpet, hardwood, or tile
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   Consider hiring a builder on contract. Everything will be made easier if you hire an experienced builder to oversee the project. You won't need to worry about doing everything yourself, hiring out particular tasks, and securing the permits yourself. It's also much easier to secure a construction loan if you're working with an experienced builder who can include a statement, resume, banking and experience references, a line item cost breakdown of expected costs (an ECB), a materials list, and a construction contract.^[8] The contract should include:
   • The individual responsibilities of each party
   • The expected date of the beginning and ending of the project
   • The payment expected by the builder
   • A completed Estimated Cost Breakdown (ECB), signed and dated
   • Provisions for changes

Part 4 of 7: Breaking Ground

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   Lay the foundation. After a site crew excavates the plot, you'll begin the work of laying the foundation. The type and design of the foundation will depend upon the size of your house, the ground in which its laid, local building codes, and whether or not your home will have a basement. The most recommended and strongest type of foundation is concrete block.
   • The excavation crew should first survey and stake the dimensions of the foundation and excavate it to the desired depth, then smooth it out to a workable surface, sometimes overlaying dirt or gravel to build upon.^[9]
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   Pour the concrete foundation on which to build. These are used to distribute the weight evenly and should be somewhat wider than the foundation walls, forming the perimeter of the home.
   • Build the form work and fill in with concrete. The form work is basically a mold for concrete, used to pour into and remove after the concrete has set. Alternatively, a block foundation can be laid which won't be removed, in which case you'll inlay rebar into the block and fill in the gaps in the block with concrete.
   • The thickness of the foundation should be determined carefully by a structural engineer, taking into consideration the height of the wall and the load it will be required to bear, both in terms of the building itself as well as the forces of gravity, wind, and earth that affect the structure.
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   Set up building lines. This means putting either batter boards or corner stakes at each corner of the house foundation to level and square up the foundation. Use a transit or building level to make sure the building lines are level and square, and check by measuring corner to corner, diagonally, to make sure the walls and corners are square.
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   Install your chosen type of floor. There are two common floor types, called "slab on grade" or "pier and beam/joist" floors. Before pouring the slab floor, you need to make sure you've installed rough plumbing lines so that they are accurately placed. After the slab is poured, it'll be too late to adjust.
   • For a slab-on-grade floor, form up the footing to the proper specs and lay rebar. Generally, these floors are made on concrete block foundations. After installing your plumbing rough-ins, backfill around the foundation with dirt and gravel, compacting it appropriately. At this point, you may also want to pretreat for termites and install moisture barrier.
   • For off-grade or above-grade floors, lay out and install wooden flooring piers and install your floor joist framing system to the proper specifications. Install subfloor/finish floor decking.

Part 5 of 7: Building the Walls and Roof

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   Frame the walls of your house. You will need to lay out the wall lines on the floor, beginning at one corner, marking your bottom plate (called the rat sill) to attach to anchor bolts.
   • As you work, mark the location of doors, windows, and interior wall corners on the sill. Be sure to use special metal connectors/straps at the floor and tops of walls as required by code for storm and earthquake proofing.^[10]
   • Use tees at wall intersections, substantial headers for openings in load bearing walls, and allow space at each rough opening for the feature to be installed.
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   Plumb the walls and brace them securely. Install sheathing if required. Otherwise, use sheet metal straps to diagonally brace all exterior wall corners. Make sure all studs (vertical framing members, usually 2 inch by 4 inch nominal lumber, graded standard or better) are securely nailed in place, straight and square to the wall line.
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   Lay out the marks for setting your roof trusses. You may want to stick frame your roof, cutting and installing rafters and ceiling joists yourself (especially if you want a useable attic space). Prefab trusses, however, are engineered with lighter, smaller lumber for maximum strength. There are some trusses for attics with high-pitched roofs and dormers, as well as more traditional roofs. Research your options and choose something that works well for your home.
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   Set each truss in the correct location. Generally, this means 24 inches apart from one another, sometimes 16 inches for stick-bracing structures. Attach hurricane clips or other connectors to secure them, plumb the center of each truss, and temporarily support them with a rat run bracing near the peak.
   • Install diagonal gable bracing for a roof with gable ends to prevent the roof frame from leaning when you install the roof decking. For a hip roof, install king rafters and hip rafters, being careful to keep the adjacent plane of the roof consistent and straight.^[11]
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   Nail a sub-facia board to connect the ends of each rafter. Build outlookers to support the gable overhang and gable facia boards, if used. Deck the trusses or rafters with plywood, oriented strand lumber, or nominal lumber such as 1 x 6 inch tongue and groove boards.
   • In areas where high winds or snow-loading (accumulation) is possible, make sure the roof decking is secured and structurally able to withstand these severe forces and conditions. Use appropriate bracing and fasteners for this scope of work.
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   Install roofing felt for use as a moisture barrier. To make sure the elements don't set you back as you're working, it's important to install a moisture barrier on your roof even before it's completed. Use 15 or 30 pound roofing felt tar paper and simplex nails, roofing tacks, or plastic capped felting tacks to secure it. Begin felting the decking at the lower edge, allowing it to hang over slightly, and overlap subsequent layers to keep water from getting under this moisture barrier.
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   Install the exterior siding and exterior features such as windows and doors. Many locations require some type of metal flashing to prevent water from penetrating the edges and the gables, but you may be able to seal them sufficiently with caulking if it is permitted and you are able.
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   Install your final roof. You may choose painted sheet metal panels, rolled steel formed to lengths needed on site, or shingles, terra cotta tiles, or other materials, depending on your preference, costs, and products available at your location. Consider ridge vents, attic exhaust fans, vented dormers, and other architectural details which can increase the comfort of your house while decreasing cooling costs in hot climates.

Part 6 of 7: Starting on the Interior

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   Install pipes for potable water, waste drains, and drain vents in walls. These can be capped off to trim out after the walls are finished, especially if the local codes require pressure testing before finishing may be done.
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   Install HVAC (air conditioning and heat) ductwork, air handlers, and refrigerant piping. Stub out your ductwork for return air and supply air registers. Insulate the ductwork if it is not pre-insulated, and seal all joints. Fasten ductwork as needed to prevent movement and ensure the your conduits are flush.
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   Rough-in electrical outlets. Most likely, there will be electrical outlets, light fixtures, and special wiring required for large appliances like water heaters, stoves, and air conditioning that will be necessary to do as soon as possible. Install the main electrical panel box, and any sub-panels your design requires, and install wiring from these to each device.
   • Commonly, #12 Romex cable is used for ordinary lighting and outlet circuits, and nail-in electrical boxes are attached to the wall studs, with the front edge protruding to allow for the finished wall material to be flush.
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   Install insulation. Insulate walls where it is required. Depending on the climate, you will want to get location-specific guidelines for this area of work, as warmer climates will use substantially less insulation in the walls than warmer areas. Insulate the spaces between ceiling joists and walls.^[12]
   • Walls are usually insulated with a minimum R-value of 13, and ceilings with a minimum of 19, but as much as 30, or even more for lowering fuel and utility usage.
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   Install your ceilings. Gypsum wall board made of drywall or sheetrock is a common material used for this application, but there are other products including accoustical ceiling tiles, beaded plywood paneling (to simulate planking), and even natural wood lumber that are commonly used for creating solid ceilings.

Part 7 of 7: Installing the Essentials

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   Install plumbing fixtures as necessary. Install the bath tub, shower enclosure, and any other large plumbing fixtures which will interface with finished walls. Make sure plumbing rough-ins are correctly located, and pipes are protected and securely anchored.
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   Install the wall board or paneling on interior walls. Traditionally, builders will use gypsum wall board, wood, or masonite paneling for this purpose. Panels are generally jacked 3/8 inch above the floor to avoid moisture from floor spills and regular mopping when you clean the house. There are many interior wall products available, so the installation process will depend on the material used. Apply finish to gypsum wall board, taping and skimming/floating all joints to an acceptable level of finish. Finish/texture any ceilings during this step if applicable.
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   Place wall trim. Put up any trim you are using for baseboards, crown mouldings, and corners, and install your interior doors and jambs. If you are using natural wood trim and mouldings, you will want to paint the walls prior to this step. Prefinishing the trim before installing will make the final finish easier, but any nail-holes will probably still need attention after installation.
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   Caulk, paint, and install wall coverings on any walls that require it. Most likely, you will want to prime wall board, then apply a finish coat. Use a paint roller where possible, cutting-in with brushes around appertanances and in corners.
   • Be sure to trim out the electrical devices, install lights and other fixtures, and install breakers in panel boxes if they were not pre-installed.
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   Install cabinets and other mill work. You will probably need at least basic kitchen storage cabinets and a bathroom vanity cabinet for a sink, other cabinets may include a bar, upper storage cabinets, and lower units with drawers for kitchen utensils and supplies.
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   Install flooring. Note that for carpet floors, base boards are installed prior to flooring, leaving 3/8 inch for the carpet to tuck underneath it. For hardwood or composite floors, this trim is installed after the floor is finished.
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   Install appliances and have the utilities turned on. To start checking to make sure everything's working appropriately, activate the water and electricity to start experimenting with your handiwork. Adjust the jobs as necessary and work on finishing the house to a state at which you'll want to move in and start enjoying your new home.

The 10 Most Common Problems When Building a New Home

Home construction rates are at historic lows.  One of the banks I work with is offering a 12 month construction loan of 3.75%.  I am also seeing an up-tick in the number of inquires for home loans. It certainly appears the bottom has been reached.

I also wanted to let you know that we recently acquired another website called Wise Home Building.The site offers the Wise Home Building Guide, a step-by-step guide for first time consumers that are building a new home.  It also sells consulting services to consumers for their home building projects.  We can provide a review and critique of your contract, specifications, house plans, change orders, and final walk through inspection. You can find the site here: www.creatingourhome.com.   The site is still undergoing revisions, and not everything is yet working, but we hope to have it completely functional within the next month.  We will provide more details in the future.

Lastly on our Home Building Pitfalls site we are trying something entirely new.  We are offering the E-book for to you for FREE.  I am a little hesitant about doing this, but I thought it was worth a try—so we are doing it on a trial basis.  After a couple of months we’ll look at the results and see if this makes sense for us to continue to do or not.  The program is really simple and works as follows.  To get Pitfalls free, you are required to complete a no-obligation offer from any of several dozen MAJOR retailers.. companies like Ebay, Discover Card, Staples, Gap, etc.   By completing an offer with one of these companies – again a no obligation offer taking about 5 minutes of your time - - they pay us – and that enable us to give you the Pitfalls book absolutely FREE. 

Best Regards,

James Todd
House Building Guide
Home Building Pitfalls
Wise Home Building

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2. Ten Most Frequent Issues

The “Ten Most Common Issues” presented below are provided courtesy of the new website we purchased, Wise Home Building.  This list was compiled by a builder with 35 years of experience in the industry.  This list is a good starting point if you are considering a home building project. Get up to speed and educate yourself so you are in a position to AVOID these problems on your own project.

1. Buyers, lacking the necessary knowledge of the building process, forego control of their investment and look to their builder as their sole source for guidance. This reliance upon the builder to fulfill their responsibilities often ends in disappointment.
   
   When you hire a builder, you are hiring someone in business to make a profit. That means that he will look after his own self interests first, and yours second. Hiring a reputable, ethical builder is certainly important, but it doesn't change the above fact. There is no one that will protect your interests in the building project, except for you-or someone that you might hire on your behalf such as inspector. Building a new home is probably one of the largest financial commitments you will make, protect your investment by become knowledgeable about the process.



2. Builders fails to visit the construction site with the owner before construction begins to analyze the surroundings, conditions, potential obstacles and specific site circumstances that often require special attention.
   
   This is another common mistake, and it's one that can be easily avoided and one you don't want to make. Why, well the best reason to give you is that the financial repercussions of NOT having this meeting will be borne by you. In other words, if something is overlooked, or needs to be changed when the construction begins, because the builder did not visit the site prior to initiation, the builder will look to you to pay these extra costs. And if you balk or refuse, he'll just stop work.
   
   
3. Builders fails to make progress construction inspections. Builders rely on their subcontractors to establish the norm for quality and completeness of their work.
   
   This problem is quite common. It's like asking the fox to guard the chicken coop. If a subcontractor makes a mistake, especially one that will cost him money to remedy, he is likely to try to hide it rather than fix it. If YOUR builder who hired this subcontractor, does not inspect or review this work and catch it, then YOU will bear this cost, either directly in dollars to remedy it at some point in the future when it is discovered or indirectly thru a lower quality product and/or reduced aesthetic appeal.



4. Builders' contracts are builder favored making them self-serving. They use open-ended language pertaining to various condition costs, they have unaddressed quality standards, and weak performance commitments, etc.
   
   Boy, this is true, big time. If you don't plug these holes you will find it difficult to resolve disagreements or differences, because the contract favors the builder. While a legal review is a good place to start, lawyers are not builders, and you need someone with a building or construction background to vet the document as well. Here is just one example…
   
   Cold weather may require temporary heat in the home or excessive rain may damage or require water to be pumped from the basement of foundation hole. If these were NOT addressed in the contract, guess who will be responsible for these additional costs?? A clue, it won't be your builder.
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Building a new Home? Avoid home builder construction rip-offs

Until recently, Lawrence Thomas worked for one of the largest builders in the country. Lawrence shares knowledge he gained the hard way: Dealing with hundreds of angry homeowners while managing the warranty department for one of the country's largest home builders. This book exposes the inside secrets and tactics employed by builders, and is a must read for anyone planning on buying or building a new home. It's a critical component of your education that will save time, money, and countless headaches. Order by phone, mail or online, 100% money back policy. Available as a printed book or an electronic document that can be download and you can begin working with immediately! Check it out now.


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The New House Building Guide -
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Intimidated by the idea of being your own builder? You're not alone. Most people don't have the time, expertise, or contacts to perform this task. The good news is that you don't have to. You can use hire a builder and still save thousands. Get the House Building Guide and learn how. The Guide contains step-by-step instructions, sample specifications, an example building-contract, and dozens of money saving, convenience and healthy house building tips. This is an indispensable resource for anyone interested in building a new home. Newly released, 137 page binder, with pre-printed checklists, forms and templates!

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In Depth, Home Study Course

The Successful Home Building Training Program is normally provided in a seminar format at a cost of $395.  These training seminars are attended by both consumers planning on building a new home, as well as builders that want continuing education.  The Home Study version of this seminar is now available to you for a cost of  $97 (plus shipping). The Home Study Course was assembled by a licensed building contractor who has built more than 500 custom homes, and has a Masters degree in Adult Education from Florida State University. Click here to see the Table of Contents and find our more about this valuable resource. 

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Excessive and/or needless "allowance Items" are used for the builder's convenience. These allowances are poorly estimated amounts that favor the builder.

This is a common problem because it is human nature to take the course of least resistance. Rather than make some calls to track down pricing on something a builder is uncertain of, they'll simply throw in more than enough dollars to cover the unknown. This works to your disadvantage it several ways, and can end up costing you more money.



Excessive charges for Change Orders made during construction.

One can never emphasize this enough. Keep your change orders to a minimum, and the best minimum would be NONE. Why, because a change order occurs once you have hired a builder and started construction. That means that if you ask for a change, the builder can charge you whatever they want within reason (and sometimes outside of what is reasonable), because there is no way to competitively bid this - AND if your home building contract did NOT stipulate the acceptable or allowable markup on change orders- they you are stuck! Morever, if you have an agreed upon timetable for completion in your contract, you have now given your builder some wiggle room to miss the deadline because you changed something.



Incomplete and/or poorly described Building Specifications.

It takes some work to come up with a complete set of specifications for your home- but it is worth the effort. It helps you retain control of your project, it protects you from the use or substitution of lower quality items, it results in a more accurate overall budget, and it can save you money because if you discover something you don't' like that was not specified in your Building Specs, and ask the builder to change it… ching, ching, ching… I can hear a change order coming.



Unrealistic projected completion dates.

If you have a timeline for moving into your new home, a prospective builder may use this as a sales tool to get the job, when in reality it is impossible or at least very unlikely that the projected date is attainable. You should be knowledgeable about the process to the degree that you can spot or at least suspect if a timeframe is unreasonable. Secondly, you need to tie this issue down in the contract -with specific dates, allowance for "Acts of God" beyond the builder's control (i.e weather) and with specific penalties that are not unreasonable, but yet sufficient to cover your out-of-pocket expenses should the agreed upon date not be met.



The use of intimidation to project and/or persuade personal opinions.

Unfortunately this is all too common. It may start small but if you let it slide a few times, you will likely see it repeat itself and progress to larger items. For example if there is a small defect that you point out to your builder, he might say: "Well that is really not a defect, it is within the range of what is considered normal… and if you worked in the building industry and built as many homes as I have you would know that." If he uses this once and gets away with it, the next time something comes up, he will not be hesitant in trying it again.



The unwillingness of owner to confront builder with justified complaints.

This issue can be related to the above issue in #9. A home owner may really have a justified complaint, but is afraid that if he approaches the builder, the builder may stop or slow down work on the project thereby delaying completion and occupancy.

Let FHA Loans Help You

FHA loans have been helping people become homeowners since 1934. How do we do it? The Federal Housing Administration (FHA) - which is part of HUD - insures the loan, so your lender can offer you a better deal.

• Low down payments
• Low closing costs
• Easy credit qualifying

What does FHA have for you?
Buying your first home
FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.
Want a fixer-upper
FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.
Financial help for seniors
Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer "yes" to all of these questions, then the FHA Reverse Mortgage might be right for you. It lets you convert a portion of your equity into cash.
Want to make your home more energy efficient
You can include the costs of energy improvements into an FHA Energy-Efficient Mortgage.
How about manufactured housing and mobile homesYes, FHA has financing for mobile homes and factory-built housing. We have two loan products - one for those who own the land that the home is on and another for mobile homes that are - or will be - located in mobile home parks