In Finance Friday, we covered 10 tips for working with contractors. As a followup, it’s also important to think about the insurance policy the contractor you hire carries. If your contractor does not carry a contractor’s insurance policy, it basically means that you may not be compensated if his or her work results in some serious damage to your home.
Although you may decide to sue, it’s not going to do you any good if the damage is more than the contractor can afford to pay for out of his or her own pocket.
So, bottom line, before you engage anyone to work on your home, make sure that he or she has Contractor’s Liability Coverage!
What is Contractor’s Insurance?
When a contractor works on your property, he or she has many opportunities to either cause injury or damage. Should an accident occur, contractor insurance will cover both the contractor and you. This will become clearer when we go through a few examples.
Contractors who buy this particular type of insurance are not only protecting themselves against a lawsuit, but they’re also making sure that you’re fully compensated for any accidents cause while working at your home.
It’s important to recognize that the term “contractor liability coverage” is a general classification of an insurance policy because different contract work will need different levels of protection. By the nature of their work, a plumber will cause a different type of damage than an electrician. Hence, the policies are customized to suit each particular profession.
Should your plumber, for example, accidentally flood your house when working on a leaking pipe, he or she will be able to pay for the extensive water damage to your drywall and furnishings by paying a deductible to the insurance company, which will then pay for damages.
What Does Contractor’s Insurance Cover?
So what kind of damage and injury are we talking about here?
Essentially, the insurance company will cover three broad categories:
- Structural Damage.
Contract work requires the use of manual tools or power tools. Either one can cause extensive damage to your home. A window installer could be wielding a hammer that slips out of his hands, lands on your mantelpiece, and smashes the Chinese Ming Dynasty Molded Stoneware Yenyen Vase that you got at an auction for $14,500. Flying into a rage or listening to an abject “Sorry Ma’am” will not cut it. However, if the contractor has insurance, the insurer will either buy you a new vase or compensate you in full for the damage.
A contractor can just as easily cause an injury. A contractor on scaffolding could drop his heavy metal toolbox on your dog walking right below it. The liability insurance will pay all your veterinarian bills and if your dog should die during surgery and you decide to sue the contractor, the insurance will pay for your legal costs and damages.
- Other Incidents.
Sometimes a contractor might cause damage while working on your house. He or she might, for instance, knock down your Ming vase while using a power tool in the upstairs bedroom that causes the living room wall to vibrate. While he did not directly shatter the vase, he still remains responsible for it edging past the mantelpiece and shattering on the floor. Again, his contractor’s insurance will cover you.
Admittedly, it’s awkward asking a contractor if he really is the professional that he claims to be and has taken out the right contractor’s insurance, but, in this case, it’s something you need to be assertive. This is one of those instances in life, where it doesn’t pay to be wonderfully tactful. In most cases, everything will work out just fine, and your contractor will do his work without causing any damage or injury, but you want to make sure you cover this issue before you hire him or her to come into your house and work on a few things. Accidents, after all, aren’t predictable.