Step 1: Check the personal liability section of your home owners policy
What’s typically covered: Negligence—a contractor slips on an ice walkway. Check your policy and state rules for specifics, notes Chicago-based attorney Steven J. Thayer.
What’s not: Major injuries—limits are usually fairly low. Don’t trust your home owners or umbrella policies to protect you if a builder’s employee sustains major injuries.
Also, accidents due to your gross negligence. For example, if you knew your roof was damaged and unlikely to handle the weight of a ladder and didn’t tell the contractor, a lawyer could argue that was gross negligence.
Policies vary widely. Look in the personal liability section of your home owners policy for details, says Jack Smith, a spokesperson for the trade group Independent Insurance Agents and Brokers of New York.
The bottom line? Instead of worrying over your insurance, make sure your builder has his own.
Step 2: Check your contractor’s insurance
Any builders you hire should have their own general contractor liability insurance—ask to see proof. The insurance should cover:
- Any bodily injury or property damage the firm accidentally causes to you, your family, and your property.
- Workman’s compensation for injuries builders cause to themselves or their employees. Not all states require this for small contractors, so ask your contractor to provide you with a policy certificate.
- Accidents involving the contractor’s own equipment, such as falling off a ladder. (Contractors using your ladder could claim it was your faulty equipment, not their clumsiness, leading to an insurance battle and a lawsuit. Don’t provide your contractor with anything more dangerous than a pencil.)
Builders have to ante up a lot for all this contractor liability insurance—and it will be reflected in their bill. But if uninsured workers hurt themselves on your property, you’ll find a lawyer’s hand in your pocket pretty quickly.
This applies to subcontractors as well: Ask your contractor for a list of all the subcontractors on a job so you can check their insurance status as well.
Step 3: Minimize risks
Remember that insurance is an essential protection but not perfect. Lawyers advise that negligence claims can easily end up in court and out of your hands—and your insurer’s. You can’t always control your builder’s safety habits but you can get rid of fallen branches and wet leaves from your driveway before the workers even show up. And hire safe contractors recommended by friends and neighbors.