If you are looking to hire a contractor to work on your property there are some precautions that you should take before signing any contract and committing to having them perform the work. Simply because a contractor hands you a piece of paper that they want you to sign doesn’t mean that you have to agree to it. It may mean that they won’t perform the work if you don’t agree to all of their terms but you have to remember that you are the person doing the hiring and they are working for you.
With your contract should include limitation on the liability of the homeowner for all accidents that happen on your property. You shouldn’t even have to consider for a second that the person performing work at your home will sue you or your insurance company to cover an accident that they have.
In addition to physical accidents you have situations where a contractor may believe that they have performed their work properly but there are problems with workmanship or materials that does not show up at the final review.
Finally you have things that may get damaged on your property due to the work being performed. Lets say you are having siding or roofing installed and your contractor uses scaffold that ends up crushing the roots of your bushes. This won’t show up maybe for a month after they are gone. Or you may have situations where damage is caused by accident by the contractor and they should be held accountable to fix the damage or even hire another professional when needed.
So there are many instances where insurance is necessary. Your home owners insurance may cover some parts in the end but if the damage was due to your contractor you should hold them accountable.
Contractor Liability Insurance
Every contractor should have Liability Insurance. It is their responsibility to hold and pay for this insurance to cover the work they do as a professional.
I have seen contractors that try to make the customer pay for their liability insurance and this is simply wrong because it is a cost of doing business that the contractor must pay out of their pocket.
When a contractor bids on your job they should provide you with a copy of their contractor liability insurance and you should verify that it is still in effect with the company. Its not a big thing and the contractor can go to their insurance agent and pickup a copy to provide to the customer.
How To Purchase Contractor Liability Insurance
If you are a contractor and you are looking to purchase liability insurance you will have to find a company that writes policies in your state. Normally you won’t find that the big insurance companies provide this type of coverage. You will need to find a local company that sells policies from many of the smaller insurance companies.
The policy will be based on the type of work you do and the amount of coverage that you need. If you are working on small jobs you may only need a basic policy for about $500 a year that will cover all of your work at all of the customer locations. If you are working on a very large project you might need site specific liability insurance and maybe also a bond to cover other aspects of the job. Bonds are used for contractual reasons to protect the customer.
Normally you will need to provide your contractor’s license when you are purchasing insurance.
Final Note
Whether you are a Contractor or a Consumer you should understand that liability insurance protects not only the customer but also the business owner.
If a situation happens and a customer has to sue to recover money due to damages the insurance will help and if the contractor gets sued it means they won’t go out of business for a mistake they made.
Obviously everyone in these situations has legal recourse but as a consumer it is important that you protect your rights as much as the contractor will protect their rights. They hand you the contract to sign and you can bet that none of the wording is placed there to protect your rights. When in doubt you can add hand written changes and cross out lines that you believe put you in the wrong side of negotiations and remember you are negotiating as much on all of the services, warranties and liability as you are on the price.