When undertaking any construction or renovation project on your property, it’s essential that you hire workers that are fully insured. There are potential legal troubles lurking if you don’t hire contractors that are fully insured. Checking contractors for insurance is often overlooked in the hiring process, but it shouldn’t be. You can be inviting a range of legal troubles by not requesting to see a certificate of insurance. Understanding the risks and taking proactive measures can protect yourself from legal troubles. Here are some of the woes you may face if you don’t check for insurance.
1. Personal Injury Liability
One of the most common legal troubles a homeowner faces when they hire a roof maintenance contractor that is not insured is the potential for personal injury liability. Accidents can happen during construction, renovation, or maintenance work, and if someone gets injured on your property, you may be held liable if their business is not insured.
When a business doesn’t carry insurance coverage for their workers, and that worker is hurt on your property, someone must pay. You could be held liable for medical expenses, rehabilitation for the injured worker, and potentially for lost wages. The cost can be significant. You may have to absorb the cost of paying an attorney to defend you in court if the injured worker decides to sue.
This may sound mind-boggling that someone you hired for roof coating service or installing a fire sprinkler can sue you if they get injured, but they can. If the company that they work for doesn’t have insurance, the cost of any injuries can fall squarely on your shoulders. Roofing, specifically, is a very dangerous job. Be sure you ask for a certificate of insurance to protect yourself and your finances.
2. Property Damage
Personal injuries are not the only issue that can cause legal troubles. What if you hire someone for seawall repairs to keep the water on your property at bay, and while they are doing the work, they knock your very expensive outdoor dining set into the soup? Who pays to replace that dining set? If you hire someone that is not insured, you do.
There are many different types of potential property damage that can happen when you hire a contractor to make repairs, upgrades, or to install new features in your home. Construction and renovation often involve using heavy machinery, tools, and materials that can accidentally cause damage to your personal property, your neighbor’s property, utility infrastructure, and more. Without insurance coverage, you may have to shoulder the entire cost of repairing the damage.
It can get expensive paying for property damage. Not to mention, it can ruin your relationship with your neighbors. Legal troubles can be abundant when a local window company working on your property causes damage to someone else’s property and the company is not insured. You could wind up in court with your neighbor haggling over the cost of repairs. It’s not worth the risk; check for a certificate of insurance.
3. Contract Breaches
A little-known fact is that companies that are insured are often insured against breach of contract. Let’s say you hire a contractor to manage well pump service for your home. The contract with this company outlines things like timelines, services provided, and more. Well, the contractor didn’t carry out the contract as written. The contractor is in breach of the contract.
If the contractor is insured, you can claim with their insurance company to cover any losses you experience because of the breach. If they are not insured, you will have to go to small claims court to file a claim, attend every hearing, and hope the judge finds in your favor. During all these legal troubles, you are still out of the money you lost from the breach.
Additionally, filing a court case, hiring an attorney to represent you, and missing work all cost more money. Remember, you may win and be able to recoup some of the money, or you may lose and never get a dime back. Avoiding legal troubles and headaches starts by ensuring you only do business with insured contractors who can prove it.
4. You May Violate Local Building Codes
Many localities have expressly written rules about contractors’ need to be insured to work on certain renovation, building, and repair projects. These rules are in place to protect both the workers and the building owners. You may violate your permit by hiring a good pump service that doesn’t have insurance.
Many construction and renovation projects are subject to building codes, zoning regulations, and other rules. Neglecting to obtain the necessary permits, inspections, and approvals can lead to violations and legal troubles. The rules can be stricter when it comes to commercial properties. For example, a commercial roofing contractor not only has to carry insurance but also must be licensed.
Enforcement and penalties can be tough. You could be fined, and, in some cases, if the inspector finds out your contractor is uninsured, you could be forced to undo the work and start over. It is essential to ensure that your contractors have the appropriate insurance and licensing to stay in compliance with building codes. Trying to fight city hall and get an exception to the codes can get very expensive.
5. Working As Your Own General Contractor
Many homeowners choose to work as their own general contractor or project manager instead of hiring a professional general contractor. It’s fine to decide that you want to oversee your project on your own. However, you should keep in mind that when you are acting as your own general contractor, you may have to take out a workers compensation policy for any sub-contractors that you hire.
Let’s say that you need garage door repairs as part of your project and decide to hire someone with a handyman service and the skills to make the repairs. You got a great price on the repairs. You also realize that this handy person is uninsured and not a professional. Since you took on the responsibility of acting as the GC for the renovation projects in your home, you are now responsible for ensuring that the handy person is covered in case they are injured.
Don’t think that your homeowner’s insurance will cover the cost of any injury while the worker is working on your property. Homeowners’ coverage may cover parts of the cost, but it is at the insurance company’s discretion as to what will be paid. Additionally, that nice handy person that you hired may be able to establish an employment-type relationship, which would then make you fully liable for costs associated with the injury. Acting as your own GC and not having insurance coverage can open a whole can of legal troubles.
6. Negligence On Your Part
You may still be scratching your head, wondering how it is that a company you hire to work on your property for roof maintenance service. That is easy to explain. All someone must do is bring a negligence claim against you. Here is how proving negligence and making you’re responsible for costs works.
Let’s say you needed service trackhoe rentals to work on part of your yard, and let’s also say, you hired someone to paint the exterior of your home. The trackhoe was left in the driveway. The painter arrives, is not paying attention, and trips over the trackhoe while unloading their truck in your driveway. The painter breaks their ankle in the process.
Are you negligent in this case because you left a trackhoe parked in your driveway? The answer is maybe. A jury may find you negligent, and your homeowners, based on that finding, may not cover the cost of the injury. You went with the uninsured painter because that was the cheapest quote, yet here you are with a bag of legal troubles, being sued for being negligent in parking equipment in your driveway.
7. Material Problems
Finally, dealing with an uninsured company doesn’t apply only to contractors and service providers, material suppliers also should be insured. For example, a metal fabrication service that is creating metal works for your home should be insured, and here is why. Let’s say you commissioned a fabrication shop to make new handrails for the exterior of your home. Let’s also say those handrails fail because of shoddy craftsmanship.
The handrails fail and someone is hurt. Is it your fault that the metal was not fabricated correctly? No. Should you be responsible for the cost of someone getting hurt because of the shoddy handrail construction? No, but you may be held responsible if the fabrication shop is not insured. You may have to eat the cost of the faulty material and any injuries that occurred because of the faulty material.
Whenever you are dealing with a specialty supplier that will provide materials or equipment for your renovation projects, make sure they are insured. If you don’t, you risk all the legal troubles and expense of trying to prove your point in court. Ultimately, you are responsible for what happens at your home, unless there is an insurance company to file a claim with.
8. Look for These Flags
Before you hire a contractor, it is essential that you do your due diligence to avoid legal troubles. Investigate the company you are considering by checking out their website. They will note that on the company website if they are fully licensed and insured. If they are not insured, you will notice that there is no mention of being insured. Check out the online third part reviews to learn more about any contractor you are considering.
Check with the governing agency for the contractor you are considering to learn if there are any open complaints or past complaints against the contractor. You can also check with the local authority that would oversee and issue permits for the field the contractor works in. For example, if you are hiring a plumbing contractor, check with your local code enforcement agency to see if there are any code violations against the plumber and if the violations were rectified.
If you look for the red flags, like having complaints on file or having a list of code violations associated with the company, you can avoid the legal troubles they may bring by looking elsewhere for a contractor. Insurance is an important factor in hiring a contractor, but it is not the only factor you should consider. An insured contractor with a reputation for delivering poor-quality work will likely provide you with poor quality.
9. Keep This in Mind
Adopt this simple mindset; legitimate businesses will have insurance. Legitimate businesses have insurance because they have something to protect, they want to be sure that their business is protected. They are insured because they value their customers and their business. An uninsured business of any kind is a potential liability to your home and your lifestyle. Being sued and dealing with legal troubles is stressful and it can be financially devastating.
Asking to see a certificate of insurance shouldn’t be a problem for any business. Any contractor that gets annoyed because you want proof of liability coverage is not a contractor you should do business with. Ensure that “having insurance” is required for every contract you sign.
It is far easier to ask for proof of insurance before the project starts than it is to try to get the information if there is an incident on your property. Make it standard operating procedures for any home project so that you hire only insured contractors who can prove it. Avoiding legal troubles by ensuring that your contractors are insured is the best way to ensure you don’t have the added stress of having to deal with unnecessary problems. Learn more about the type of insurance every contractor should have.