If you’re a homeowner, your property may require maintenance. Roofs wear down, plumbing leaks, and sometimes you may want to remodel your space. In these cases, you will need to hire a contractor.
Unfortunately, many hire the cheapest contractor or even a friend or neighbor to make repairs on their home or property. This opens the door to many liability issues for YOU!
Hiring a contractor with general liability, automobile, and workers compensation is a must. Without it, you could be held responsible for any injury or damage your contractor causes.
Additionally, hiring a contractor without insurance limits your ability to remedy the damage caused by faulty construction, such as water damage or fire.
Below are the 3 basic types of insurance you should require any contractor you hire to have - regardless of the size of the project.
Workers Compensation (WC)
Indiana law requires a contractor with employees, to have workers compensation insurance. However many small contractors and handymen fail to purchase WC because it can be expensive
Hiring a contractor without WC can leave you responsible if one of their employees get hurt on your property. This can mean YOU paying for the medical expenses as well as lost wages for the duration the employee is not able to work.
Imagine if any employee fell off a ladder cleaning your gutters and was out of work for 2 years. YOU could be liable for the medical bills and paying lost wages for 2 years!
Ask your contractor to provide you with a "certificate of insurance" (COI) prior to doing any work on your property. These documents are easy for a contractor to obtain so if they give you the runaround, that should be a red flag!
Here is an example of what a COI looks like
General Liability Insurance (GL)
If you hire a contractor without GL insurance and they damage your property - or a neighbors property - YOU will be liable for the damage! As a general rule, most legitimate contractors will carry a minimum of $2 million GL.
Some examples where you might be liable if your contractor does not have GL insurance:
Hiring someone to mow your grass and they hit a rock breaking your window of your neighbors window.
Hiring a power washing company and the soap drips into an electrical outlet and causes a fire or shorts out the home's electrical circuit
Hiring a painter and they spill paint on your carpet
Ask your contractor to provide you with a "certificate of insurance" (COI) prior to doing any work on your property.
Commercial Auto Insurance (CA)
This is often the most neglected insurance by contractors. Sadly, it is not just a homeowner who is at risk when a contractor does not have commercial auto.
Typically, if a person is using their vehicle for a business - especially if it is marked with company logo - personal auto coverage will not cover any claims because they were using the vehicle for business purposes. This means the entire public can be at risk with a contractor who fails to secure proper business insurance on their vehicles. Some additional examples are
Contractor backs into your vehicle on your property and does not have CA insurance
Contractor's ladder rack gets caught on your overhead electrical feed to your house and rips it down.
Contractor drives thru your yard and damages your septic systems leech field
Ask your contractor to provide you with a "certificate of insurance" (COI) prior to doing any work on your property.