1) What kind of coverage do you have ?
You want your contractor to be insured not only for their protection, but for yours: This includes you, your home, and the surrounding property—like your neighbors’ home and yard.
For contractors, being “fully insured” means carrying lines for four key areas to cover loss, damage, or liability that could impact their clients:
Auto: Covers a company, its vehicles, its employees who drive these vehicles, and any injuries or accidents that occur at the job site or while employees drive to the site.
Workers compensation: Covers medical expenses needed to diagnose and treat injuries that employees sustain in the workplace, as well as disability payments and sometime rehabilitation, retraining and other benefits.
General liability: Covers most claims—the most critical ones being personal injury and property damage.
Property (part of the general liability): Covers damage to your home, yard, and possessions, as well as to your immediate neighbors’ homes, yards, and possessions.
Ideally, your contractor will be insured across all four lines. At the very least, their insurance should cover:
- Any bodily injury or property damage caused to you, your family, and your property;
- Worker’s compensation for injuries contractors and employees may incur on the job;
- Accidents involving the contractor’s equipment.
Coverage in each area is essential to provide protection in scenarios that you may have never imagined could affect you.
For instance, consider the following situation: Your contractor’s employee is driving to your house to work and hits another driver. The victim’s lawyer can drag you—the homeowner—into a lawsuit. If your contractor does not have adequate auto insurance for their company vehicles and the employees who drive them, you could wind up in messy litigation—despite having nothing to do with the accident!
2) Exactly how much are you insured for ?
Just like your car and health insurance, the dollar amount for coverage under each contractor’s insurance policy can vary.
For general liability—which includes property damage—your goal is to hire a contractor with a policy that provides at least $1 million per incident/$2 million in aggregate. These amounts are the common standard for liability in the home improvement industry.
For workers comp, each state sets the minimum requirement. Therefore, as long as your contractor has a workers comp policy in place, the dollar amount will meet the mandated minimum.
When it comes to the levels for auto insurance, state-required minimum are often low. Even though the legal minimum might be—say $300,000—in their state, it is good practice for contractors to purchase higher coverage levels. Often, $1 million is more appropriate.
FORLIFE HOME IMPROVEMENT, P.O. Box 44092, Ottawa, MB R2W-5M3.