Why You Should Ask Contractors to Provide Proof of Insurance before Hiring Them

As a home or business owner, it is important to protect your property from any potential damages that could occur during a construction, renovation, or repair project. One way to do this is to ensure that the contractors you hire are fully insured in case something goes wrong.

Most reputable contractors will have insurance that covers them in the event of an accident or property damage, but it is always a good idea to ask for proof of contractors insurance before hiring anyone.

Contractor's Certificate of Insurance

A contractor's certificate of insurance is a document that shows that the contractor has the necessary insurance coverage for the project they are working on. This certificate should list the coverages that are in place, as well as the limits of each policy.

Asking for a copy of this certificate before hiring a contractor is a good way to verify that they are indeed insured. It is also a good idea to keep a copy of this certificate on file in case you need to make a claim at some point down the road.

What Types of Coverage Should You Look for in a Contractor's Insurance Policy?

When reviewing a contractor's insurance policy, there are two main types of coverage that you should look for: general liability insurance and worker's compensation insurance.

General Liability Insurance

General liability insurance is a type of insurance that protects contractors from claims of property damage or personal injury that could occur during the course of their work. This coverage will typically cover the cost of repairs or medical bills if the contractor is found to be at fault.

Worker's Compensation Insurance

Worker's compensation insurance is a type of insurance that covers employees in the event that they are injured while working. This coverage will typically cover the cost of medical bills and lost wages if the employee is unable to work.

Not all contractors have this type of insurance, but it is something to look for if you want to be extra protected.

How Much Insurance Coverage Should a Contractor Have?

The amount of insurance coverage that a contractor should have will vary depending on the size and scope of the project. However, most reputable contractors will have at least $1 million in coverage.

Asking for proof of insurance is a good way to verify that the contractor you are hiring is indeed insured. It is also a good way to protect yourself in the event that something goes wrong during the course of the project.

When it comes to your property, it is always better to be safe than sorry. Asking for proof of insurance is a small price to pay for peace of mind.

Items Covered by Contractor's Insurance

Repair or replacement of damaged property: Including the structure itself, any equipment or machinery on the site, and any materials that have been damaged or ruined.

• Medical expenses: All costs associated with treating injuries on the job site, including ambulance fees, hospital stays, and rehabilitation costs.
• Legal expenses: If the contractor is sued as a result of an accident or property damage, their insurance policy will cover the cost of their legal defense.
• Lost wages: If an employee is injured on the job and is unable to work, their lost wages will be covered by the contractor's insurance policy.

It is important to note that not all insurance policies are created equal. Some policies will cover more items than others, so it is always a good idea to read the fine print before hiring a contractor.

What Happens if a Contractor Does Not Have Insurance?

Contractors who do not have insurance risk themselves and their clients. If an accident or property damage occurs, the contractor will be responsible for costs associated with the incident. This could potentially bankrupt the contractor and leave you without any recourse.

You could also be held liable for any accidents or property damage that occur if you hire an uninsured contractor. These damages may include the cost of repairs, medical bills, and legal fees.

In short, it is never a good idea to hire an uninsured contractor. Not only are you putting yourself at risk, but you are also putting your property and huge investment at risk.

Protecting Your Property on a Personal Level

In addition to asking for proof of insurance, you can do a few other things to protect your property when hiring a contractor.

• Get everything in writing: This includes the scope of work, the timeline, and the price. Having a written agreement will help to protect you if something goes wrong.
• Check references: Ask the contractor for a list of references and follow up with each one. This will give you a good idea of what to expect from the contractor.
• Inspect the work: Once the project is completed, take some time to inspect the work. Make sure that everything is done to your liking and that there are no hidden problems.
• Get a lien release: If the contractor does not pay their workers or suppliers, they may put a lien on your property. A lien release will protect you from this type of problem.
• Get a property cover: A home insurance will ensure that your property is protected in the event that something goes wrong during the course of the project.

If you follow these tips, you can rest assured knowing that your property is in good hands.

The Bottom Line

Hiring a contractor is a big decision, but it doesn't have to be stressful. Asking for proof of insurance is a good way to protect yourself and your property. By taking some simple precautions, you can ensure that your next home improvement project is successful.