Is it important to check insurance before hiring a builder? Yes, it’s important you check whether a builder you’re hiring is insured. Hiring an uninsured builder could make you take responsibility for damages, losses, or injuries that the builder causes during the project. This article answers frequently asked questions about hiring insured builders.
- Why should you ask for proof of insurance?
- What are the risks of hiring a builder without insurance?
- What kind of insurance should a builder have?
- When should you ask for proof of insurance?
Why should you ask for proof of insurance?
Asking for proof of insurance is very vital when hiring a builder. Usually, it protects a client from any damages or injuries the builder might cause when undertaking a project. That keeps the client off the hook for compensating the damages. For instance, if a worker is injured while undertaking the project, you’re not liable if the hired builder is insured.
Additionally, most authorities or ordinances require builders to have a kind of risk insurance. It’s a requirement for such professionals that want to do business with clients. Therefore, an insurance policy is one way to determine if a builder meets the legal requirements.
Lastly, a builder with insurance tends to be more reliable compared to one without. Therefore, an uninsured builder is a red flag that they might not deliver quality. For this reason, a client should value proof of insurance: it depicts the builder will take care of the client’s property.
Note: You should go the extra mile to prove that a builder truly has a certificate of insurance. That means don’t just take their word for it but ask them to send you a certificate of their insurance. This will help you verify that they’re genuinely insured.
What are the risks of hiring a builder without insurance?
There are benefits to hiring a builder with insurance. Similarly, there are risks and disadvantages of hiring one without.
First, there is no doubt that an uninsured builder has no way of compensating a client when there is damage and when they underdeliver or fail to complete the project. Generally, a builder without insurance is not liable to pay for anything if damages or injuries occur.
Secondly, as a client, you’re likely to end up in a legal battle with an uninsured builder if something unexpected happens. For instance, you hired an uninsured builder, and their employees also have no compensation policy, but an accident occurs on the site, and they are injured. There are higher chances they will sue you seeking compensation. This type of situation also brings the additional cost of paying a legal fee.
To find out how much builders cost, ask for a written quote from them.
What kind of insurance should a builder have?
Below is a checklist of the essential things a builder’s insurance ought to cover.
General Liability Insurance
General liability insurance is a policy that covers bodily injury to builders and other persons on the site when an incident occurs or another form of injury. It also covers property damages caused by the builder.
As you check the insurance of a builder, verify whether it covers products and completed operations. Basically, this kind of coverage focuses on damages and injuries that a builder might cause after delivering the project. For instance, you hired a builder to do a coving design, and five weeks later, as you clean or paint it, it starts to fall. It could cause injuries and will bring along an extra cost of redoing it.
In the above scenario, a product and completed operation coverage would be essential when seeking compensation for your medical bill.
If your builder has other workers/employees directly involved in a project, they should have an insurance contract to protect employees if they get injured at work. It’s one of the necessary insurances a builder with a team must have. As a client, you don’t want to take responsibility for injured workers who were under the employment of your contractor or builder. It’s what is likely to happen from a legal perspective.
Builders’ Risk Insurance
Lastly, builders’ risk insurance is very significant. Therefore, it should not be overlooked.
It protects the property being worked on and the equipment being used in the project. Additionally, it also covers the cost of construction for that particular project.
A project owner or stakeholders may also take responsibility for this particular insurance cover if their builder doesn’t have one. It’s necessary for general construction or when doing major renovations.
When should you ask for proof of insurance?
Here are times and types of work that you should ask for proof of insurance from a builder:
- When doing a project from scratch or when doing a major renovation/remodelling project on a property.
- When you need major installation and repairs in your home.
- If you have a rental or lease agreement with a property owner.
- When you are hiring a builder on a contract-based agreement.
Insurance is a crucial requirement for builders. It covers some major risks and losses likely to occur while the builder is undertaking a project. Therefore, ensure you check it before hiring a builder. Additionally, insurance can play a significant role when clients seek legal assistance regarding their projects and the builder.
Remember to get multiple builders' quotes before you start any construction work if you want to have a successful outcome and acquire the best builders.