Insurance confusion is another area where homeowners become
blindsided. Most homeowners assume that a contractor has all of the proper
insurances needed to cover any type of
incident that may happen while they are on the job, but that’s not always the
case! Here are the two types of
insurance you should be sure that your contractor has before setting foot on
your property:
Liability insurance: This is how you will be reimbursed if
there is damage that occurs on your property during the course of construction.
Any contractor who is registered in the state of Pennsylvania is required to
carry at least $50,000 in liability insurance, although the Pennsylvania State
Attorney General recommends hiring a contractor with at least $750,000. That’s
quite a big discrepancy, so it is important to air on the side of caution and
choose a contractor with more coverage, rather than less. We actually recommend
choosing a contractor with $1,000,000 in coverage, since in the event of a
total loss of property, you want your contractor to have enough insurance to
cover all of the damages that have occurred.
Save yourself headaches by verifying adequate insurance coverage. |
Worker’s Compensation Insurance: This type of insurance is
required by law, and its purpose is to protect both the homeowner and the employee
by covering the expenses of the injured worker in the event of an accident . Although it is required, it is expensive, and
many contractors skirt around the issue by hiring workers and paying them under
the table. This can be extremely risky for you as a homeowner, because in the
event that an uninsured worker is injured on your property, they can sue you
for medical bills, lost wages, and even death! Yes, the probability is low, but
the risk is high! Don’t expect your homeowners insurance to cover this type of
injury either; in general most policies will not cover this because they have
no way to verify whether you have hired a competent contractor to work on your
home. To avoid a catastrophe like this, make sure that each person who steps
onto your property is covered by Worker’s Comp. Ask the company that you are
dealing with to put it in writing that everyone working on your property is
covered by Worker’s Comp Insurance. Don’t just ask if employees are covered, ask about everyone that will be on the property, because some contractors will
show homeowners paperwork stating that employees are covered, when in reality
the people doing the actual work on your home are subcontractors, not employees. If
the contractor is not willing to sign off on this important issue, more than
likely you will have uninsured workers on your property.