Contractors Insurance - Make Sure You Ask!

Contractor inspecting work.

Are you thinking about hiring a contractor to complete some work on your home or property this year? Perhaps you are considering adding an extension to your home. Or, maybe you just want to make three of your rooms into an open plan layout. That’s a very popular and surefire way to have a positive ROI on the value of your property. Unless, the contractor who completes the work isn’t insured. If that’s the case, you could find yourself in a tricky situation. There are numerous risks if you hire someone without contractors insurance. From financial loss to legal issues, these are the major ramifications.

Risks and Consequences of Not Having Contractors Insurance

If a homeowner or property owners doesn’t ask about contractors insurance, they won’t find out until much later. Usually, after something has gone wrong, that involves the work completed on the home. For instance, there might have been a fire on the property. If a disaster like this does occur on your home, the area that the contractor worked on may not be covered for damages. Essentially, you may not be able to make an insurance claim.

There might be a chance that the contractor doesn’t have insurance because they can’t get it. Often, this is because they are not a licensed contractor and as such, insurance is a lot more expensive to secure. Or, they may have not bothered to pay for insurance for the work that they complete. Either way, it means trouble for you as the property owner.d

It can even result in legal and liability issues. Particularly, if the property in question is a business address and someone is injured due to the work on the property. In this case, your insurance company may not pay the damages to the injured party.

Contractor insurance covers you for a number of issues that may occur when the work is being completed. This might include damage to surrounding property, work not be completed to a high standard or damage to your home.

Process of Asking and Verifying About Contractors Insurance

The best way to check if your contractor has insurance is to ask for a COI or Certificate Of Insurance. This will protect you from any legal damages that may result from the work completed on the property. COIs can be given in three forms including ACORD forms and manuscript forms. This will include the insured names as well as the policy limits and what is covered within the policy. However, you should go further than this. You must check by calling and making sure that the policy is current. Only then can you guarantee that you are completely covered.

Options If They Don't Have Insurance

If they don’t have insurance, then you may want to find another contractor. Alternatively, you can ask your contractor to indemnify you. This means they will cover any legal fees you have to pay due to the work being completed. Or, you can get them to set up a bond. Money is placed in this bond to again, pay for any potential legal damages. If you take any one of these measures, you will be protected from expensive and troublesome legal issues.