After a storm there are few contractors to be found that are not already booked with work.
What if I hire an unlicensed /uninsured contractor or a volunteer help with the disaster cleanup and emergency repairs?
What happens if, despite all precautions, there’s an accident involving your contractor that leads to a liability issue? Who’s responsible—and who pays—if:
Your contractor falls off the ladder while putting a tarp on your roof?
Your church volunteer gets cut while clearing storm debris?
A subcontractor hired by your contractor is injured on your property?
Are you Liable? Will you Homeowners Insurance protect you?
The time to find out is before an accident happens.
Step 1: Check the personal liability section of your homeowners policy
What’s typically covered: Negligence.
What’s not: Major injuries—but the limits are usually fairly low. Some policies do not cover uninsured contractors.
Also, accidents due to your ‘gross negligence’. For example, if you knew your roof was storm damaged and unlikely to handle the weight of a worker and didn’t tell the contractor, a lawyer could argue that was gross negligence.
Step 2: Always ask for a copy of your contractor’s insurance.
Anybody you hire should have their own general contractor liability insurance—ask to see proof. The insurance should cover:
Any bodily injury or property damage the firm accidentally causes to you, your family, and your property.
Workman’s compensation for injuries contractors cause to themselves or their employees. Not all states require this for contractors with no employees.
Accidents involving the contractor’s own equipment, such as falling off a ladder. (Contractors using your ladder or chainsaw could claim it was your faulty equipment, not their clumsiness, leading to an insurance battle and a lawsuit. Don’t provide your contractor with anything more dangerous than a pencil.)
Legitimate contractors pay dearly for all this contractor liability and workers compensations insurance—and it will be reflected in their bill. But if uninsured workers hurt themselves on your property, you’ll find a lawyer’s hand in your pocket pretty quickly.
What Consumers Should Know About Their Contractor's Insurance Coverage
Uninsured contractors can expose unwary homeowners and business enterprises into financial hardship. All responsible contractors should carry appropriate insurance to protect their clients, their employees and themselves. Many contractors now label their work force as “Sub Contractors” to avoid paying for Workers Compensation. You will then need to get proof of insurance from each on site employee since they may each be acting as their own company.
Please be very cautious in hiring any person to perform work on your property without Workman Compensation Insurance. Without Workers Compensation, if an employee has an accident and gets hurt on your property, you as the property owner or homeowner may be liable for medical costs. Your homeowner’s or liability insurance
policy usually will not pick up this claim.
Always ask for a completed “Insurance Binder” prior to any work being performed on your property. Many contractors advertise they are “fully insured” when they carry a simple $250 liability insurance binder. This only protects the homeowner if an item is broken or damaged during the construction period.
What insurance should your contractor carry to protect you, the homeowner?
Automobile Liability
All vehicles operated on your property should be insured
Liability Insurance
Get a copy of your contractor's and any subcontractors' Liability Insurance. Make sure the policy's effective dates are current and that the policy dollar coverage is sufficient to cover any potential claims for injuries or damages.
Workers Compensation
Workers Compensation pays medical bills and lost wages to any or all employees of a company who are injured while working on your house. Workers Compensation Insurance covers only corporations, or employees of
companies. If your contractor's business is incorporated then Workers Compensation Insurance must insure everyone in that corporation. If a contractor should, but does not have Workers Compensation Insurance for his
or her employees, the law exposes you, the property owner, to litigation by the injured party. In addition, it’s a state law that requires businesses to carry Workers Compensation insurance to protect both you and the employees that are working on your property.
Be sure the insurance certificate covers the period the workers will be on the job.
It is reasonable to expect that professional contractors who carry all the appropriate insurances will have greater business overhead expenses and that their bids will be a bit higher than those from workers who take business shortcuts. However, it's a small price to pay to hire the right person for the job and forego the risk of exposing
yourself, your financial future and your home to someone who is improperly insured or uninsured.
Familiarize yourself with the licensing requirements for contractors. If you have Internet access, you can find this information online. Two sites that maintain state-by-state contractor licensing information are ContractorNet and National Contractor. The National Association of the Remodeling Industry (NARI) also maintains information on state licensing requirements and a list of state agencies' phone numbers. You can also call your local building or planning department to inquire about licensing requirements.