When starting any construction project—whether building a new home, renovating a property, or managing a commercial build—the foundation of a successful job isn’t just concrete and steel. It’s the construction contract. A well-drafted construction contract is the blueprint that keeps every party protected, clearly defining expectations, responsibilities, and risk allocation.
In New York, New Jersey, and Connecticut—where construction laws and liability exposures are among the toughest in the nation—having a proper contract is crucial. Below, we’ll walk you through the key elements every construction contract should include, and then introduce you to BGES Group, the construction insurance specialists who help contractors across the tri-state area protect their businesses and employees.
1. Clear Identification of the Parties Involved
Every construction contract should start by naming all parties involved—the property owner, general contractor, and any subcontractors. Include company names, business addresses, and contact information. This may sound simple, but legal disputes often arise from vague or incorrect identification.
Clearly identifying all entities ensures that if there’s ever a problem—such as nonpayment or an injury claim—there’s no confusion over who is responsible.
2. Detailed Scope of Work
The scope of work defines exactly what the contractor will (and will not) do. This section should outline materials, labor, equipment, timelines, and specific services.
Ambiguous wording such as “perform general construction work” leaves too much room for disagreement. Instead, include specific descriptions like:
- Install new framing and drywall in all interior walls
- Replace roofing with 30-year architectural shingles
- Paint all surfaces using two coats of premium-grade paint
In New York and New Jersey, where labor laws and regulations are strict, having a precise scope of work can prevent costly misunderstandings and legal issues later.
3. Project Timeline and Milestones
Construction projects often face delays. A well-written timeline helps keep everyone accountable.
Include:
- Start and completion dates
- Key milestones (foundation, framing, electrical, inspections)
- Provisions for extensions due to weather or unforeseen conditions
Setting milestones allows progress payments to be tied to specific achievements—reducing disputes over when and how much the contractor should be paid.
4. Payment Terms and Schedule
Disputes over money are among the most common causes of construction lawsuits. Your contract should specify:
- The total project cost
- Payment schedule (e.g., 30% deposit, 30% at midpoint, 40% upon completion)
- Accepted payment methods
- How change orders or additional work will be billed
In addition, clearly define retainage (the percentage withheld until project completion) and any penalties for late payments. For contractors, this section is your financial protection; for owners, it ensures accountability.
5. Change Order Procedures
Changes are inevitable in construction. Maybe the owner decides on higher-end finishes or an unexpected issue is uncovered during renovation.
Your contract should include a change order clause that explains how modifications are requested, approved, and priced.
Without this section, contractors can be stuck performing additional work without proper compensation, or owners may face unexpected bills.
6. Insurance and Risk Management Requirements
This section is critical—especially in New York, New Jersey, and Connecticut, where construction claims and lawsuits can be severe.
The contract should specify:
- Types of insurance required (General Liability, Workers’ Compensation, Umbrella, etc.)
- Minimum coverage limits
- Certificates of Insurance naming all required additional insureds
- Waiver of subrogation, primary and non-contributory wording, and completed operations coverage
If you’re a general contractor, make sure subcontractors provide proof of coverage before stepping on site. If you’re a property owner, require these documents to ensure you’re protected if an injury or accident occurs.
This is one of the most common areas where construction projects go wrong—and where BGES Group can make a huge difference.
7. Indemnification and Liability Clauses
These clauses protect one party from being held responsible for another’s negligence.
In New York, indemnification language must be carefully worded to comply with Labor Law 240/241, also known as the “Scaffold Law.” Improper wording could make a contractor assume unnecessary liability.
Contracts should clearly state which party is responsible for accidents, property damage, or third-party claims. Always have an insurance professional or attorney review this section.
8. Termination and Default Conditions
This section explains when and how either party can terminate the contract.
It should include:
- Conditions for termination (nonpayment, failure to perform, breach of terms)
- Notice requirements before termination
- Responsibilities after termination (cleanup, final payments, return of materials)
Without clear termination terms, both contractors and owners can find themselves in lengthy, expensive disputes.
9. Dispute Resolution Procedures
Even with the best contract, disagreements can happen. Including a dispute resolution clause saves time and money.
Options include:
- Mediation: A neutral party helps resolve the dispute.
- Arbitration: A faster, private process instead of court.
- Litigation: When other methods fail, disputes go to court.
For contractors, arbitration often offers the most cost-effective path to resolution. For owners, mediation can preserve working relationships.
10. Warranties and Guarantees
The contract should spell out any warranties—both for workmanship and materials.
Typical examples include:
- One-year workmanship warranty
- Manufacturer warranties for roofing, windows, or HVAC systems
Make sure warranty terms are written clearly to avoid misunderstandings after completion.
11. Safety and Compliance Provisions
In the tri-state area, compliance with OSHA and state safety regulations is non-negotiable.
Contracts should confirm that all work will comply with:
- Local building codes
- OSHA standards
- State and municipal safety laws
Incorporate language requiring contractors to maintain daily safety inspections, provide fall protection, and train employees properly.
Why BGES Group Is the Construction Industry’s Go-To Insurance Partner
After your contract is in place, the next step is securing the right insurance coverage—because even the best-written agreement won’t protect you from every risk. That’s where BGES Group comes in.
BGES Group specializes in construction insurance across New York, New Jersey, and Connecticut, helping contractors, builders, and property owners stay protected from costly lawsuits and jobsite claims. With decades of experience, BGES Group understands the unique exposures that come with working in the construction industry—especially under New York’s complex labor laws.
Our team provides:
- Workers’ Compensation Insurance tailored for construction firms of all sizes
- General Liability Policies that include Labor Law coverage, additional insured status, primary & non-contributory language, and waiver of subrogation
- Umbrella and Excess Liability coverage for large commercial and public projects
- Certificates of Insurance delivered fast—so you can start jobs without delay
Whether you’re a small subcontractor, general contractor, or developer, BGES Group makes sure your business is fully protected—and that your insurance aligns perfectly with your construction contract requirements.
Final Thoughts
A construction contract isn’t just paperwork—it’s your shield. It prevents misunderstandings, ensures timely payments, and minimizes liability exposure. Combine a solid contract with proper insurance from BGES Group, and you’ll have complete protection for your business and every project you undertake.
For expert help with construction insurance in New York, New Jersey, or Connecticut, contact BGES Group today:
📞 Gary Wallach – (914) 806-5853