Before you hire a contractor,
ask to see their:
1. References
2. Power tools
3. Proof of insurance
Checking a contractor’s references is
always a good idea, and it’s nice to know
they have power tools. However, making sure
your contractor has appropriate insurance
can protect your assets during a renovation
and ensure that you are covered after the
job is complete.
The staff at Wilson Insurance Agency is
an important part of the renovation team
before, during, and after completion of the
work. We can:
- Help you decide how much the
renovation will increase the value of
your home.
- Provide insight on additional
coverages you may need at the beginning
of the renovation and upon its
completion.
- Determine if your contractor’s
certificates of insurance provide
appropriate coverage for the work being
done.
By the time work begins on your
renovation, you will either have hired a
general contractor to oversee the entire
job, or you will have chosen to act as the
general contractor yourself. In either case,
you are likely to find your home full of
sub-contractors (plumbers, carpenters,
painters, etc.) who will work on specific
parts of the project.
When you hire a general contractor, there
are two primary types of coverage you must
require the contractor (and subcontractors)
to carry: worker’s compensation and general
liability.
1. Worker’s compensation insurance
provides coverage to the workers (the
general contractor and his/her employees)
for job-related injuries. Worker’s
compensation is required by most states and
is usually governed and regulated by each
state’s lawmakers.
2. General liability insurance covers a
negligent act or omission that results in
property damage or bodily injury (to someone
other than the general contractor, his/her
employees, and the subcontractors he or she
hires).
Both of these forms of insurance cover
the policyholder (in this case the general
contractor) because s/he is the first person
to be found liable if something goes wrong.
However, the premises where the work is
being performed belongs to you and if the
general contractor fails to carry
appropriate insurance, an injured party is
likely to sue you as well.
Depending on the type of renovation
planned, your general contractor may also
need to provide a builder’s risk policy.
This coverage protects your existing
property and the new construction during the
course of the renovation, as well as
uninstalled appliances, cabinets, carpet,
and other items related to the renovation.
When you hire a general contractor or
subcontractor, ask for a copy of the
worker’s compensation and general liability
certificates of insurance. The following
details should be on the certificates:
- Effective dates of coverage (If they
are about to expire, request an updated
certificate.)
- Name of insurance company
- Name of insurance agent
- Amount of coverage purchased (called
limits)
- Names of insured parties (Check to
make sure the general contractor’s name
appears. A sole proprietor can exclude
himself/herself from their own worker’s
compensation policy.)
The insurance professionals at Wilson
Insurance Agency can help you determine the
proper limits for the kind of renovation you
are planning.
When you take on the job of general
contractor, you also take on the liability.
Your coverage needs can vary greatly
depending on the extent of the renovation,
and the number of people who will help you
do the work.
Each of the following situations could
trigger the need for insurance coverage
beyond your existing homeowners policy:
- Hiring subcontractors
- Hiring paid help
- Using non-paid help such as family
or friends
- Potential loss or damage to building
materials prior to use
You may require additional insurance
coverage if the planned renovation opens
your home to the elements. Tearing down
exterior walls, replacing windows, doors, a
roof, or a chimney can leave your home
exposed to theft and weather damage
liability. Most homeowners policies do not
cover this kind of exposure when it is
created by the homeowner.
Planning to renovate your condominium?
Many condominium associations provide
coverage for the general structure—from the
wall studs out—and you’re not allowed to
make any changes to that area. The
association often gives you leeway to make
improvements from the wall studs in. Check
your condominium agreement carefully to see
which areas you are allowed to renovate
before you begin.
A contractor’s bond ensures that the work
will be completed or that you will be
compensated. It is proof of financial
responsibility. It does not insure the
quality of the work, or protect you against
theft or damage.
Some renovations increase the value of
your home significantly, while others do
not. Do an insurance review with our
personal lines insurance department staff
once the remodeling is complete to make sure
your existing homeowners insurance is
providing the correct protection for your
newly updated home.
If you plan to leave your home for more
than 30 days during a renovation, you could
be jeopardizing your homeowners insurance.
Check your policy for vacancy clauses. You
can most likely purchase additional coverage
if needed. |
Millions
of Americans are operating full or part-time
businesses from the comfort of their homes.
One of the secrets to running a successful
home-based business is being able to
separate your business activity from your
home activity.
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