Did you know that a contractor you hire can sue you if they’re injured while working on your home? Even if they fall off of your roof because of their negligence, you could still be facing a lawsuit. And even if you win, you could still end up having to pay for a lawyer to defend you. Continue reading to learn what kind of insurance you should look for to make sure that this doesn’t happen to you.
Why Does it Matter if Your Contractor Has Insurance?
You may be asking why you should worry about your contractor’s insurance coverage instead of just bumping up your own homeowner’s coverage. There are three answers to this question.
- Avoiding gaps.
- Making things easier.
- Making sure your contractor is reputable.
Your homeowner’s coverage would likely provide some coverage in the event of a contractor getting hurt, but there might be gaps in coverage, policy exclusions, or limits on coverage. If the contractor has adequate coverage, you don’t need to worry about these gaps.
You should also consider the reason why a contractor might want to sue you — because it may be the easiest or only way they have to recover. If they trip on their tool and fall off your roof, it isn’t your fault, but if they have no insurance, their only chance to have someone else cover their expenses is to sue you. If they have their own coverage, it will be easier for them just to file a claim with their own insurance who would probably never think of trying to recover from you.
Having their own insurance coverage is also a sign that your contractor is doing things right. This isn’t a fly-by-night operation but someone who takes care and plays by the rules.
What Coverage Should Your Contractor Have?
There are a few different coverages you should ask your contractor for proof of.
- Workers Compensation: Workers compensation covers the contractor if they or their employees are injured while working on your home. Illinois exempts sole proprietors from legally having to buy this coverage, but it’s still good for all contractors to have it to make sure they’re protected from injuries.
- Commercial General Liability: Commercial general liability provides broad coverage for things like the contractor causing property damage or accidentally injuring your neighbor. Without this coverage, you could be legally responsible for covering your neighbor’s expenses if your contractor doesn’t have insurance or assets to make a claim against.
- Commercial Auto: Auto coverage protects against accidents on or around your property. Again, if a contractor you brought to your home causes damage, your neighbors may be able to hold you liable if they can’t recover from the contractor.
- Builder’s Risk: Builder’s risk insurance covers the contractor’s tools, materials, and equipment from things like fires and theft. Having this coverage in place can help avoid an argument over what actually happened if neither the homeowner nor contractor understandably wants to be out of pocket for an act of God or third-party theft.
Talk to Your Insurance Agent
Your insurance agent can help you understand what kind of coverage your contractor should have for your specific home improvement project. They can also help verify that your contractor has this coverage in place.
AFI Insurance works with homeowners in Rolling Meadows, IL, and surrounding communities. Talk to us today to learn more about insurance coverage for contractors and whether your own homeowner’s coverage is adequate.