They say “the devil’s in the details.” That is certainly the case when it comes to remodeling. One example is in the area of insurance. It is probably common knowledge that the contractor or contractors you hire to remodel your home should be insured but what exactly does that mean?
Contractors carry 3 basic types of insurance: vehicle, liability, and workman’s compensation.
Everyone is familiar with the first type. It covers accidents to persons or property caused by or involving the insured’s vehicle(s). Your contractor should carry this type to protect you in the event that he injures you, someone else, or property with a vehicle he owns, controls or utilizes while at your home performing the work you hired him for.
The second type protects you in the event that you, someone else, or your property are damaged as the result of the contractor’s work. This would cover things such as a piece of furniture that is broken by the contractor while working in your home. It would cover the medical costs if your child stepped on a jagged piece of debris left lying around the work site. It would cover a neighbor who trips and falls over a cord or hose and is injured.
If there is an incident, the contractor may elect to pay the cost himself rather than make a claim against his insurance and risk a premium increase. Regardless, the insurance needs to be sufficient and current to cover any reasonably possible accidents.
It is also a good idea to be familiar with your homeowner’s policy regarding these types of incidents and you can always ask your agent if the certificate of insurance the contractor has provided you is adequate for your protection.
The third type of insurance is workman’s compensation. This type of insurance is intended to cover any injury sustained by someone working on your home. This type is a little more complicated.
In most states the owner(s) of the business is not required to carry workman’s compensation insurance on themselves. If they are injured on your job they could sue you and your homeowner’s insurance carrier.
If the contractor has a work comp policy, who does it cover? Is the owner covered if he is working on the job? What about the other workers who may or may not be his employees? The time to be sure you are adequately protected is before the contract is signed and the job has begun. All of this only becomes important of course if there is an incident. You have nothing to gain however but everything to lose if something drastic happens and you are liable.