Risks of Hiring Contractors Without Liability & Workers Comp
When you hire a contractor to work on your home, you want the most suitable one to complete the project. Yet, many homeowners prioritize the project’s overall cost and cut corners to save money by hiring subpar contractors who are not insured. Homeowners who employ uninsured contractors may end up paying more out of pocket due to the low-quality work completed which may need to be repaired and replaced.
If you’re a homeowner looking to hire a contractor, consider why contractors should have liability and workers’ compensation and the potential risks if they do not.
What is Liability and Workers’ Comp?
Liability and workers’ compensation (or workers’ comp) are two distinct types of policy coverages for workers, but they often go hand in hand.
General liability insurance coverage, or liability, is critical for independent contractors to have. It protects their business and workers should the work performed damage client property, cause bodily harm, or advertise injury. Workers’ comp is an insurance policy that protects workers and pays for any harm or injury that comes to them while on the job.
As an individual employing the contractor to perform work, it’s up to you to ask and verify if they have proper liability and workers’ comp before signing the contract. Otherwise, you could be held responsible for the alleged wrongdoing or accidents caused by the contractor’s work without insurance.
What are the Risks of Hiring Contractors Without Liability and Workers’ Comp?
If you decide to roll the dice by hiring a cheaper contractor who doesn’t have liability and workers’ comp and an accident occurs while they’re on your property, the costs can be high. The contractor can attempt to make claims on your homeowners’ insurance policy. Not only does that mean you’re potentially responsible for paying out the appropriate fees and deductibles on such claims, but it guarantees your home insurance rates will go up.
Another risk you potentially face when hiring a contractor without proper coverage is that any faulty or defective work they complete will be your responsibility to pay to fix. When your contractor has liability and workers’ comp, you have recourse to get these future fixes paid. But when they don’t have these coverages, you’re accepting the risk that you’ll be put in the position to pay for future related fixes.
Liability and workers’ comp are like any other insurance policy in that you are paying to protect yourself from potential damages and economic losses that could occur later on. The difference, however, is that these policies protect the contractors and not you. As a homeowner, you must verify that they are covered because if accidents occur and the contractors are not insured, the costs will fall solely on you.
If you need help in navigating insurance types for contract workers at your home, you should speak with experts trained on the topic. Schechner Lifson Corporation is happy to review your situation and recommend a suitable health insurance plan for you. Contact us today, so we ensure all your insurance needs are properly met.