Contractor Insurance - Have Proof
Contractor insurance is the first line of defense for the home owner to manage construction risk. Injury to a construction worker, property damage and vehicle damage on your property are your three concerns when you hire a contractor.
Asking a contractor if he has insurance and then signing a contract without written proof is positively reckless. You need the contractor's Insurance Company to send you copies of the contractor’s policies for Workman's Compensation Insurance, General Liability Insurance and Automobile Insurance before you sign a contract.
The best time to let a contractor know your insurance requirement is during the invitation to bid. There are two ways you can have your requirements met:
• Have the contractor's Insurance Company send you the contractor’s policies.
• Tell the contractor the minimum coverage you need.
Either way you will have to find out how much coverage for each policy is the minimum required for the type of work to be performed by the contractor and any subcontractor. Different types of work require different insurance rates for workman's compensation since the different trades have their individual risks. Check this excellent link for additional insurance information.
Contractor Insurance - Terms to Include
Next, check with your insurance agent to insure the contractor insurance coverage is enough protection for the type of work you intend to have the contractor and each of the subcontractors complete.
In addition, specify in your contract that only contractor’s employees will have access to your property. Also, ask your agent if you need additional clauses for “Hold Harmless” and “Additional Insured” (co-insured).
You are probably asking yourself:
• This sounds absurd, why do I need this?
• Will I frighten contractors away with this requirement?
This is much less absurd than having an uninsured worker on the job injured since you could be liable for damages. A reputable contractor will be eager to provide whatever insurance is required not just to secure your contract but also to gain your trust for future work and referrals.
Pennsylvania now has a contractor registration that checks the insurance documents submitted by the contractor. If you request the state license number at first contact, then you save yourself a lot of time and effort before you first meet with the contractor.
Check the license number information on the State site for details important to you for your project. After you complete this initial investigation then you may the bid process to those who pass this step.
An additional step for every subcontractor submitted with the completed bid must be included in your due-diligence.
