What Happens if a Contractor Doesn’t Have Insurance?

Hiring a contractor is a logical and common practice if you require services that involve repairing or updating physical elements of your property. For both residential and commercial properties, various maintenance, construction and remodeling tasks may be entrusted to contractors. However, when hiring a contractor, it’s necessary for you to conduct your due diligence and ensure they have an adequate insurance portfolio.

Why Do You Need Contractors to Have Insurance?

When a contractor is brought on to conduct work on your property, you are entrusting them with significant responsibilities amid substantial risks and hazards. Given the dangers present at construction worksites and the pressure of completing tasks on time, the potential for damaging accidents or costly errors is constant.

Furthermore, if your contractor lacks sufficient insurance, you may be sued for losses and damages arising from any incidents that occur. For example, if a contractor lacks workers’ compensation insurance and their employee is injured while working on a project at your property, they may file a claim against you.

What Insurance Should Contractors Have?

Although not all projects or situations carry the same exposures, the following forms of coverage should generally be included in most contractors’ insurance portfolios:

• General liability coverage—This type of coverage may provide financial protection if a contractor is held responsible for an incident that leads to third-party losses, such as a passerby getting injured by a falling object or a neighbor experiencing property damage during construction.
• Products and completed operations coverage—This coverage can help pay for losses or injuries resulting from faulty work discovered after the completion of a project, such as a deck or balcony collapsing due to poor construction.
• Workers’ compensation coverage—If a contractor or their employees are harmed while working on a project, this coverage can help pay for various costs, including medical bills, lost wages, disability benefits and legal expenses.
• Commercial auto liability coverage—Although many contractors may not carry their own fleet of commercial motor vehicles, even the use of a single truck to transport, load or unload materials can result in incidents that may not qualify for a general liability claim. In such cases, this coverage may provide financial protection for the associated losses.

How to Verify Contractors’ Insurance

When checking contractors to ensure they have sufficient insurance coverage to work on your project, request a certificate of insurance and pay particular attention to the following elements:

• The name of the insurance company
• The name of the policyholder
• The policy number
• The issue date
• The policy’s coverage limits

In addition, verify that any subcontractors involved in the project are adequately covered either by the general contractors’ policies or by their own.

Protect Your Project

Construction projects of even modest size and scale can have many risks and exposures. Even for the most responsible and careful contractors, a single error or lapse in attention could lead to incidents with devastating losses. If your contractor lacks adequate insurance, those expenses could be passed on to you and have irreparable ramifications for not only the project at hand, but also your overall financial wellness and future.

We’re here to help. At Select Insurance, LLC, our agents are well-equipped to help you understand coverage needs as it pertains to contractors. We will work with you to ensure that you are adequately insulated from potential damages. Contact us today to get started

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.