This is the second most important question. Owners have been financially harmed by uninsured or inadequately insurance contractors.
A contractor should ALWAYS provide you with a Certificate of Insurance for Comprehensive Liability, Worker’s Compensation, and Completed Operations Insurance that protects you in the event of an accident or provides financial coverage for a failed project. The insurance should be adequate to cover the property.
Contractors may also carry other forms of insurance, such as health insurance and vehicle insurance. Do not be confused by these policies. Do not allow the contractor to pass them off as his proof of “contractors” insurance.
- Call the insurance company and verify coverage.
Contractor insurance policies are for one year and unscrupulous contractors have been known to modify the dates. Check carefully the dates on the Certificate Of Insurance. Is it current?
Worker Accidents: Be aware that Owners are sued for injuries on their property. Most Owner Insurance Policies exclude outside contractors, so it is critical to make sure there is proper and adequate coverage. Don’t be fooled by the contractor who says he doesn’t need insurance because he is self-employed.
A tell-tale pattern of an uninsured or underinsured contractor is the low-bid. Be very wary of the low-bid. Also be wary of multiple low bids. You may have several uninsured contractors bidding the project.
Today, insurance to protect the workers and your property is a significant cost of a construction project.
For example, Worker’s compensation premiums are typically no less than 20% on top of the worker’s wage, and can go as high as 100%, depending upon the type of work.
The contractor, working without insurance, saves between 20% and 100% of his labor cost by operating without insurance, but he puts you at great risk. The contractor working without insurance, generally has no assets and nothing to lose, so you as the Owner, are totally exposed to any losses.
A professional contractor will readily provide you with a Certificate of Insurance and phone numbers you can call for verification.
Job Site Safety: Safety violations are now causing projects to be shut down and penalties are levied against involved parties. Some Owners have been stuck with incomplete projects due to violations and the contractor’s unwillingness to pay fines or return to the site. In some cases, the Owner can be classified as the employer and they can or have been found responsible for the fines.
Ask contractors about their Safety Plan, which is required by OSHA.
Professional contractors will readily provide you with a Safety Plan so you are protected. The Safety Plan is another tell-tale sign of professionalism or the lack of same.