You’ve figured out how to find a contractor. You’ve gotten multiple bids, and scrubbed references and referrals, but did you check for contractors insurance? Maybe not. So, why bother?
When hiring a contractor, it is very important that you check their insurance and how it extends to employees or potential sub-contractors. If the contractor doesn’t have adequate insurance protection and one of the workers gets injured on the job at your house, they could end up suing you and you might be held responsible.
Looking for Contractors? Here Are Some Tips and Questions to Ask a Contractor
Protect yourself. Only hire licensed contractors. And don’t take their word… perform a contractor license check by asking to see the insurance policy so you can make sure that it’s up to date and that the limits are adequate. It’s absolutely acceptable to ask for an insurance certificate (or binder) from your contractor. The contractor and his/her insurance agent should happily provide it. The problem is that not many people are aware of this right to see their contractor’s policy when they have questions for contractors, and therefore don’t ask for it. Any hesitation, delay or pushback from the contractor about providing a binder is a red flag signaling problems with their coverage. To further protect yourself, you should request to be added to the contractor’s policy as an additional insured for the duration of the project.
Okay, now you have the policy. What do you look for? Following are the three key coverages in a contractor’s insurance policy:
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- Worker’s Comp: |
Applies when an employee or sub-contractor gets injured on the job site. Worker’s Comp covers medical/ rehabilitation expenses and lost wages for the worker. If the contractor’s limits are not adequate, an injured worker may sue you |
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- General Liability |
: Covers negligence on the contractor’s part, which causes injury or property damage to others |
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- Builder’s Risk: |
For new, ground up construction, this coverage applies to damage to your home and materials, including materials that haven’t been installed yet. The amount of this coverage can/should be increased as the project progresses, for example once the first floor is finished and the second floor begun. |
When you’re looking for contractors, it’s always a good idea to call the insurance company or agent listed on the binder to verify that the coverage is current and in effect.
During the contractor license check, you should also confirm your contractor’s licensing status with the New Jersey State Labor & Industries Department. All home improvement contractors must register with the state of NJ via the Home Improvement Contractor’s Registration Act & Home Improvement Contractor Regulations. This requires home improvement contractors to register their business with the state so their insurance coverage and any complaints against them can be monitored.
Contact the State Division of Consumer Affairs at 973-273-8090 to confirm the person is a registered home improvement contractor. And most important, if you feel you have been cheated or scammed by a business, you can file a complaint with the State Division of Consumer Affairs online or by calling 1-800-242-5846.
If you need further information regarding how to find a contractor, or would like suggested questions for contractors, contact your local insurance company.
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