When building or renovating a home, verifying contractor insurance and ensuring your contractor is licensed and bonded is one of the most important things you can do.
Sure, there are the plans, materials, and budget, but if the contractor you hire isn’t licensed, bonded, or doesn’t have constructor insurance, you are putting yourself and your family at risk. That risk is why hiring a bonded, licensed contractor with contractor insurance is so important.
The Risk of Hiring an Uninsured Contractor
Anyone who does work at your home or on your property should be properly insured—whether it’s a contractor, a painter, landscaper, or pool cleaner.
For example, let’s say you hire a landscaping company to trim your trees. While on the job in your backyard, one of the workers falls off a ladder and breaks her leg. If the landscaping company doesn’t have proper insurance, you could be financially liable for the injury because it happened on your property.
If the company has contractor insurance, then the company is responsible. See how important it is?
Contractor Insurance: Important Questions to Ask
Hiring an uninsured contractor may save you money upfront, but you may end up paying more later. So ask your contractor if they have
workers compensation insurance,
liability insurance protection.
Ask your contractor for an ACORD certificate of insurance (COI). This is a one-page document that verifies the contractor company has the insurance it claims to have. It shows the name of the insurance company, the plan’s limits, and the expiry date.
If your contractor refuses or fails to show you a COI, be wary. They are very easy for a contractor with legitimate contractor insurance to get and produce because most insurance agents will provide them to companies free of charge.
What Is the Difference Between Being Bonded and Insured?
Contractor insurance is essential, but a contractor that is bonded is equally important. Why? Well, while insurance protects you if an employee gets injured on your property, a bond protects you if the contractor doesn’t do the job properly, doesn’t finish the job, or if one of the employees damages your property.
Contractors purchase bonds through a surety company and pay premiums to keep them current. If a contractor walks off the job without delivering the finished product, you can make a claim for compensation against the contractor with the surety company.
In many jurisdictions, contractors must be bonded to get a license. A bond also offers you protection if
the contractor doesn’t pay subcontractors,
the contractor doesn’t pay suppliers,
the contractor doesn’t pay for proper permits,
tools and/or material go missing or get stolen from your property.
If you do make a claim against a contractor with a surety company, remember you need to provide evidence that the contractor failed to live up to the terms you agreed upon or that the job wasn’t done to your satisfaction.
License to Build
Thirdly, you need to make sure your contractor has a valid license. In many states, contractors and subcontractors can legally operate without a license. So, why is it so important?
Well, as we mentioned above, if a contractor is licensed, it usually means it is also bonded. Plus, you can have peace of mind that the contractor takes its business seriously enough to go through the trouble of obtaining a legal license. Without a license, you could be dealing with a fly-by-night operation!
How to Verify Contractor Insurance, Bonds, and Licenses
The most important thing you have to do is to ask questions. Ask your contractor if he/she has contractor insurance, and demand to see an ACORD certificate of insurance (COI). You can also follow up and call the insurance company to verify the coverage and confirm the limits. You can also ask that your name gets added to the liability coverage.
When it comes to licensing, ask to see the contractor’s license, note the license number, and you can check with your state’s licensing board.
The same goes for the bond. Ask to see the bond certificate and follow up with the surety company to verify it’s valid. Then you already have the surety company’s contact information in case you need to file a claim.
Hire a Proven Licensed. Bonded, and Insured Contractor
One Man & A Toolbox has been providing professional handyman services to Alabama homes, businesses, and families since 1997. We are insured, bonded, and licensed with all the credentials. We have a drug-free workplace, and all our technicians undergo background checks.
We are also a member of the Better Business Bureau. Our reputation is your guarantee that our work is professional, efficient, and done right the first time. Contact us today to learn how we can help you improve your home.