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“So What” if My Carpenter is Not Insured? – Part 1

When you hire someone to perform work on your home you may be tempted to cut corners.  Certainly you can find a good tradesman at a cheap price, especially if you don’t worry about things like insurance, permits, etc.  Right?

This may be true – but be careful! There are some very real risks in hiring an uninsured contractor to do work on your home. We all know it’s better if our contractor is insured, but do we really know why?

You should expect a reputable contractor to carry at least three types of insurance:  automobile, general liability and workers compensation.

Automobile is more for his protection than yours, though you could be affected if the contractor or his employee damages your vehicle or your neighbor’s vehicle with his construction vehicle.

More important is general liability insurance. This insurance should cover claims for property damage or liabilities that occur in the course of the contractor’s work on your property.  Construction sites can be dangerous places – with roofs to fall off of, structures without railings, ladders, exposed wiring, etc. Imagine that a neighbor’s child was seriously hurt playing around an unattended site where a porch was being built on your property. Or that a worker made a mistake during construction that resulted in serious structural or water damage to your property.

If the contractor is insured, the insurance company should cover the legal costs to defend a suit against whomever may be suing you (for example, the parents of the child who was hurt), as well as pay for any resulting judgment or settlement. If he is not insured, you could have to sue your contractor to get him to take financial responsibility, while at the same time paying your lawyers to defend you – and there is always the possibility (probability?) that an uninsured tradesman won’t have the assets to pay for these damages anyway. Also note that your homeowners insurance normally won’t cover situations that arise out of a paid contractor doing work on your site, so don’t count on having that to fall back on.

Next time: Why you need a contractor with workers comp insurance …