How Do I Know If My Contractor Is Insured?Posted on Mar 10, 2016
So you hired a painter to come in and paint your family room. He came well recommended from a good friend who said he did a great job and that the price was fantastic.
You interviewed him and he said all the right things and your friend was right – the price was fantastic. You shook hands and the deal was done. And he did do a great job, except that on his way out after a perfect paint job, his ladder got caught on an electrical wire, ripping it out of the wall and causing a fire and about $25,000 in damage to your home and property as well as causing you to relocate for two weeks until your home could be restored.
Because he was at fault, you asked him to pay for the damage. All of a sudden, he stopped returning phone calls and you were forced to put in a claim for the damage to your own insurance company. What could you have done differently to avoid being stuck with the bill?
First, you should have had a written agreement with your painter that specified the work to be performed, the price for which it was to be performed and, most importantly, language that specified that he was required to maintain a general liability insurance policy.
This agreement should be signed and in place before any work began. A contractor’s general liability insurance policy would have covered this loss and you would not have had to resort to your own policy to repair the damage and the costs associated with being displaced from your home.
If the contractor can’t or won’t agree to this, you should move on because the only insurance available to cover the claim will be your own.
Second, assuming you have a written agreement, ask the contractor for a Certificate of Liability Insurance (COI). This document provides, on a single page, information about the type of insurance coverage, the policy limits, the name and policy number of his insurer and the policy’s effective dates. Once you get the COI, give it to your own insurance agent so she can verify its authenticity. If she gives you the green light, it’s safe to proceed.
Finally, remember the adage “you get what you pay for.”
Why do you think his price was so fantastic in the first place? Because the one piece of overhead that he did not have to pass along in his estimate to you was the cost of general liability insurance. In this case, an ounce of prevention would have been worth a pound of cure.