Everyone Needs to Hire Insured Contractors, Including YOU!

Hiring Insured Contractor’s The Right Way

Home improvement projects of all kinds can cause headaches, just like building a home can.  And, while the entire process is difficult, you can find yourself in hot water if you choose to use a contractor that is not insured. Now, you may wonder how in the world you would know if the contractor you hired was insured or not, and the answer is quite easy….

You ask them and require proof!

This is not something that you should ever fool around with, and while you could take their word for it, you should always ask for proof to be sure.  After all, there are some sly folks out there that would lie in a heartbeat just to get your money!

As you are looking for the perfect contractor for the job that you need, you should check with your friends, neighbors, family members, and even co-workers to see who they have worked with in the past.  This may narrow your list down a little to those who are more favorable.  Once you have a basic list, it is always a good idea to check online to see the ratings and reviews of those contractors.  You can even do a search with their name and the words, scam, complaint, and rip-off.

Another helpful site is the Consumer Protection Agency, because they can tell you if the contractor you are considering is licensed.  If they do not have a license, then the chances of them being insured is slim.  The Better Business Bureau is another great option, as this is where you can see if your contractor has a good reputation in the business world.

After meeting with the contractors of your choice and narrowing it down to who you want to work with, it will be time to ask for that proof of insurance.  Please check carefully to see the policy effective date, as well as the expiration date.  You don’t want that insurance expiring before your work is completed!  If that could potentially happen, a quick call to the insurance agency that the policy is with can help solve your concerns, because they can tell you how many years the contractor has had a policy with them.  If it has been continuously renewed for more than five years, you should be okay, but that is still not a guarantee.

You will also want to make sure that the contractor that you want to work with has enough insurance coverage.  At the very least, they should have personal liability coverage, property damage coverage, and workers’ compensation coverage.  All those coverages should cover your contractor, their employees, you, your property, and even your neighbor and their property.

While the subcontractors that your contractor uses should be covered under the contractor’s insurance, it is always a good idea to make sure that they have their own insurance policies as well.  This will ensure that you are not responsible for any injuries or damage that they do while working on your home.

Wait a minute, you didn’t realize that YOU could be responsible for any injuries or damage that occurred during the work that was being done on your home?

Yes, you can be responsible, and that money may end up coming out of your pocket, because most of the time it is not covered under your home owner’s insurance policy!  And, if your policy does cover it, you will still need to pay your deductible.

Therefore, that is one of the main reasons why you should always hire a contractor that has insurance!

Now, you may be thinking that you can just hire a friend to do the work that you need, even though they are not licensed.  After all, you have known each other for years, so its all good!

Not really…

Out in California, there was a court case, Mendoza v. Brodeur.  The homeowner asked their neighbor to complete some work on their home and the neighbor got injured.  The homeowner used the reasoning that since he thought he was hiring an independent contractor who had insurance, he was good and not liable for anything that happened.  However, the courts didn’t see it that way and decided that the homeowner should have purchased workers’ compensation insurance prior to the work being completed since he was using an employee.  Since the homeowner didn’t have that insurance, he was required to pay for his neighbor’s medical expenses in full.

You see, even having a friend, or a neighbor, do the work can be tricky, because if something does happen, that person is going to want to protect themselves and their future.

There are dozens of other horror stories out there involving uninsured contractors including the following:

  • During the California wildfires, a bulldozer operator was killed while he was working. While his family should have received compensation for his death, they did not, simply because the company that he worked for did not have workers’ compensation coverage.
  • A homeowner is in the process of getting sued by a subcontractor that is uninsured and not covered under the general contractor’s policy. The subcontractor had an accident on the homeowner’s property while completing work there and will most likely win the $35,000 they are requesting from the homeowner.
  • Homeowners pay a good amount of the cost upfront only to find out that their contractor was never planning on doing the work.
  • Uninsured contractors can often do the work for less, since they do not have the necessary insurance. However, they also may not do quality work, which many homeowners find out too late.  Imagine having a bathtub leaking and ruining a good portion of a home or having a roof leak after an uninsured contractor put a new one on.  The homeowner would then be responsible for the repairs or replacements, as there would be no recourse with the uninsured contractor.

You may think that you will be fine if you find the perfect contractor who just happens to be uninsured.  However, think of your future and how it will look if you need to pay for that contractor’s mistakes.  Now is not the time to take risks, so do not settle for anyone who cannot show you their active insurance policy that has more than enough coverage for the work that you need done.

Resources:

https://www.consumer.ftc.gov/articles/0242-hiring-contractor

https://www.angieslist.com/articles/what-are-risks-hiring-unlicensed-contractors.htm

https://www.angieslist.com/research/contractors-legal-aspects/

http://jandahvac.com/unlicensed-contractor/

https://www.allpropertymanagement.com/blog/post/the-danger-of-using-unlicensed-and-uninsured-contractors/

https://www.heritagepci.com/blog/beware-of-unlicensed-contractors/

https://getjones.com/insurance-horror-stories/

https://www.bigapp.work/insurance-for-contractors/

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