As the homeowner you want your contractor to have insurance in case things don’t go according to plan either during or after the remodeling job is completed. If the contractor damages your property or is responsible for someone getting hurt on your property you want his insurance company to pay and not your homeowner’s insurance company. There are several types of insurance policies your contractor and their subcontractors should have to protect you from financial loss, whether in the form of property damage or bodily injury or both. Your contractor should provide you with a certificate of insurance which reflects the types and amounts of insurance his company has. Determining whether the insurance they have is adequate depends on the scope and size of work they have been hired to perform. Following is a list of the most common types of insurance policies available to the construction industry:
General Liability: This is the most important policy your contractor should have. It is the insurance policy that insures the contractor for damage to your property due to faulty workmanship, damage to your property and injuries to persons as a result of the contractors operations or their negligence. These types of claims would be covered under the Products/Completed Operations and Premises/Operations parts of the general liability policy assuming that the insurance company does not exclude residential work or subcontracted work. Some contractors might have an insurance policy that does not protect them from claims arising out of subcontracted work. This could leave you in a difficult position in the event of an insurance claim. For this reason you need to make sure that both the remodeling contractor you hire and any subcontractors they might hire both have insurance for these types of claims. If for some reason your contractor does not have adequate insurance you could be the one financial responsible.
Builders Risk: This policy insures damage to the materials that will be used during the remodeling job whether the materials are being temporarily stored, on a delivery truck, on your lot waiting to be installed or installed pending final completion of the job. Types of damage could result from fire, wind, water and theft. Although your homeowner’s policy could also pay for part of these types of losses, it might be more beneficial to have the contractor secure this coverage for your specific job.
Workers’ Compensation/Employers Liability: This coverage provides the contractors employees with medical and disability insurance for on the job injuries. While you are not responsible for the contractors employees medical costs, if they do get hurt their sole source of remedy would be the workers’ compensation policy and not your homeowner’s policy.
By Brett Baker, Vice President of Elsey & Associates Surety/Insurance |
