I recently bought a new house and started in on some remodeling projects right out the gate.
This got me thinking about how I could give some advice to other homeowners, especially when it comes to protecting their interests. More specifically making sure they are covered if something goes wrong or a worker gets injured.
As a business owner and contractor myself, I know that I want people working in my home with the proper insurance coverage. I also understand when homeowners hire a contractor, they may just assume the person carries all the required insurance and licenses, but that might not be the case.
That’s why it’s so important to ask what kind of insurance they carry.
RetroFoam of Michigan is on a mission to educate homeowners, so as part of that mission I have put together the insurance information you need before your project gets started.
What Kind of Insurance Should a General Contractor Have?
To protect myself from personal liability or having to file a claim on my personal homeowners’ policy, I like to make sure they carry both general liability and workers’ compensation policies.
Whether your contractor is a one-person operation or has dozens of employees if they are in the construction business, they need to have insurance not to just protect themselves, but to protect homeowners as well.
Now we’re going to dive into the most important insurance requirements and a couple of bonus ones.
General Contractor Insurance Requirements
It’s important to ask your contractor if they have insurance, but it’s also important to know why they should have general liability and workers’ comp.
Let’s take a look at both kinds of contractor insurance requirements, what they cover, and what that means for you. I even threw in a few bonus insurances for good measure.
General Liability Insurance
General liability insurance will protect you if accidents happen during the project.
This includes damage to your property and if you or another third-party gets injured.
The purpose of making sure they have general liability is if the contractor doesn’t and they damage your property you will likely have to pay for the repair or file a claim with your homeowners’ insurance.
Workers’ Compensation Insurance
Workers’ comp covers the contractor if one of their employees gets injured on the job.
The workers’ compensation policy will pay that employee’s wages and medical benefits. It will also prevent that employee from being able to sue you directly.
The purpose of making sure the contractor has a workers’ compensation policy is because if they don’t and one of their employees gets injured while working on your property you could be held responsible.
Other Optional Contractor Insurance
These insurance policies may not be required where you live, but they are good to be familiar with just in case.
- Third-party liability: This is usually required by state law. It protects homeowners from claims a contractor might make against them. Subcontractors may also carry this as it covers the contractor they are working for, so only people on the job site are liable for wrongdoing.
- Specific coverage extension: While completely unintended on the part of the contractor, poor planning, design, workmanship, and materials can happen. This insurance will extend coverage past what regular liability insurance will cover.
- Property insurance: This doesn’t mean the homeowner’s property, but the property of the contractor. This will protect the contractor’s equipment, tools, and other physical assets.
Hiring a Contractor for Your Home Project
Now that you know what to ask your contractor about their insurance coverage, there are some other things that could be helpful to ask them about.
Ask for references from homeowners they have worked with in the past, ask about their experience with the work you’re hiring them for, read their online reviews, and make sure they are licensed to do the work you’re hiring them for.
I hope you found this helpful. Below you will find some articles that will help you even more as you remodel your home. While they are focused on insulation, they can be helpful no matter what kind of contractor you’re looking to hire.
About Mark Massey
Before starting the business, which covers the entire lower peninsula of Michigan, Mark brought 25 years of foam insulation experience and administration to the table. He is also BPI certified and has completed the Dale Carnegie course and multiple building sciences classes. On an average day, Mark oversees the day-to-day operations of all departments in the company. He continues to work to make a difference in the lives of homeowners, but also his employees and the community at large. He does this with a partnership with Make-A-Wish Michigan and other opportunities to give back. Traveling across the globe is a passion of Mark’s, so much so he has his pilots license. He also enjoys hiking and bicycling.