Contractors are a dime a dozen. Consumers can post their home improvement requests to websites like Nextdoor or HomeAdvisor and within minutes, they’ll have offers from a multitude of contractors. While it’s nice to have a choice of contractors to work with, how does the average homeowner know who is best? More importantly, what happens when something goes wrong?
If you have worked with a home repair contractor, you know it’s a commonality for them to show their liability insurance before getting started with your project. This holds them responsible for any damages that may happen to your house. But why does a contractor need this insurance?
Why a Contractor Needs Insurance
When you work with a contractor, it’s inevitable that the two of you will disagree at some point. Maybe your sink was installed too low or there’s an electrical hazard in your home because of wiring mistakes. If your contractor is unlicensed and carries only general liability insurance, then you’re out of luck if something happens to your property while under their care. No matter how much proof you have that they did the work incorrectly, you will not be able to get them to pay for any damages caused by their negligence or carelessness.
So how does one make sure they are dealing with a reputable contractor? Most contractors carry both business licensing and liability insurance in order to hold themselves responsible for any errors during construction. Before hiring anyone, make sure they carry the right types of insurance. If you are presented with a contractor who carries only general liability insurance, find another contractor to work with because this means they are not holding themselves responsible for any damages caused by their actions.
Taking a Contractor to Court
Liability insurance is not a guarantee that you will receive financial compensation if something goes wrong. In most cases, liability insurance only ensures that your contractor holds themselves responsible for their actions and provides funds for any damages they cause during the course of construction.
In order to successfully sue a contractor for damage caused to your property, it must be proven that they were negligent or reckless in carrying out their work. For example, a contractor who causes a fire because of faulty wiring would typically be held liable because there was negligence involved with his work. A good way to determine whether a contractor is negligent is asking questions before hiring them as well as checking their references from previous clients. If they have been accused of being careless or negligent before, then there is probably a good reason why.
If your contractor ends up being negligent and you are able to prove it, then it’s time to take them to court. Other contractors who have worked with the same problem, along with home inspectors or electricians, may be called in to help provide evidence that negligence was involved in your case. Use whatever documentation you have when explaining the issue(s) regarding your property when taking them to court. A judge will ultimately decide whether or not the contractor is guilty of negligence after reviewing all evidence presented in front of him/her.
What To Do If Your Contractor Does Not Carry Insurance
If a contractor does not carry insurance but requires payment before working on your home or business, they are most likely a fly-by-night operation that does not want to be held responsible for any damage. In some cases, they simply do not have the money to finance the cost of insurance, which means you may be better off hiring someone who has it.
When a contractor requires payment before beginning work on your home or business and doesn’t carry insurance, there are some actions you can take in order to protect yourself —
- Keep every piece of paper related to the project including receipts and canceled checks as proof of payment
- Request invoices from previous projects so you will have a record of their capabilities
- Get recommendations from friends or neighbors regarding contractors they have worked with in the past
- Ask for professional references from past clients
If possible, try looking up contractors online but always ask for recommendations from previous customers. If you’re a contractor reading this, make sure you sign up for a liability insurance policy right away.