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Category: Insurance

Contractor’s Bond and General Liability Insurance Pitfalls

General liability insurance is quite important to protect your workers, property, and other valuables. But there are many contractors’ general liability insurance and California contractor license bond pitfalls which are not covered by insurance companies. You can’t claim any amount if it is not mentioned regarding insurance. Therefore, it’s essential to be aware of these pitfalls as you won’t get anything from the insurance company under certain circumstances.

Let’s look at some important aspects contractors’ surety bond and  liability insurance

• Are you working with licensed contractors?
Before hiring any contractor make sure that the person has the license. If your contractor does not possess the license, then you can’t claim an amount from the insurance company in case of any crimes or dishonesty. Make sure to verify whether the people working with you are covered by a licensed firm.

• Does the insurance terms are applicable for your whole period of construction?

Some policies are made according to the period. For example, if you get agreed with an insurance policy for three weeks then it will protect you for three weeks only. You will be required to complete the construction within the same period. If your policy expires and anything wrong happens to your property or workers, then you are liable to pay all the charges, not the insurance company.

• Do the insurance policy cover injuries, construction property, and theft?

Construction sites are very dangerous as different tools and equipment are used. These tools may injure anyone passing through that region. If your policy has no rule regarding the injury to the third party, then it is another contractor’s general liability insurance pitfall according to which you will be liable to pay the medical and traveling expenses of the injured person.

Also, check whether there is a liability for theft, or not. Normally at construction sites, we can observe many tools and machinery lying here and there. There are some other valuables as well, therefore make sure in case of theft the insurance company is liable to pay you the amount.

Some policies do not cover the property and asset damage. So don’t forget to verify if this factor is present or not.

• Is the contractors’ liability insurance cover the higher risks?
There is a limit to the risks of a contractor by an insurance or surety bond company. If you are working at higher risks, then you need to know whether your insurance company will provide you the claimed amount if there are any critical and serious cases. If not, then you will be liable to meet that expense.

Conclusion

These were some contractors’ general liability insurance pitfalls which can be very disadvantageous for you. These conditions will make you liable to pay the charges on your own. That is why it is required before signing policy, read it and make sure that every condition is mentioned in it. So that if there is any crucial condition, then insurance company will not refuse to pay you the claimed amount.

What Can Happen if Your Contractor Isn’t Insured

Working with a non-insured contractor is the worst possible risk that any home owner could take. All contractors must have two kinds of insurance, those are, worker’s compensation and liability. Both of these insurance policies protect the homeowner in various ways. For instance the liability insurance ensures that you as a home owner are protected in case damage is caused to the home by the contractor. This could be in such a case whereby said contractor was fixing the upstairs bathroom and the bathtub came crashing through the floor. A common misconception is that homeowner’s policy will cover you in such an event while in real sense, it does not.

WHAT CAN HAPPEN IF YOUR CONTRACTOR ISN’T INSURED

Failure to hire insured contractors could lead to loss of your property. In a worst case scenario, you might be sued all the way into bankruptcy. Furthermore, most of the state laws allow one to have a limited amount of property or wealth once you have been declared bankrupt therefore inconveniencing you.  Here is a closer look at what can happen.

Secondly, as mentioned earlier, homeowners policies of insurance exclude the damages which occur as a result of using non insured contractors. A legal precedent which may illustrate this is the California case of Mendoza versus Brodeur whereby the plaintiff had his neighbor do some work on his home. The home owner’s defense was that he thought the defendant was an insured contractor. However, the court quashed this defense and held that anyone who hires a contractor who is not insured should be covered by workers compensation in the event that an injury occurs during the job.

Even though there is no guarantee that a non-insured contractor will perform a poor job as compared to he who is insured, the risks involved are too great. This is why:

1. BASIC PROTECTION

Proof of insurance in the specified field shows that whoever you are hiring has at least attained the minimum level of skill. This shows that the contractor did not simply gain his experience from watching contractor shows, rather, he took his time to learn and understand the basics of contractorship and what it takes to do a great job.

2. PROTECTION OF PROPERTY VALUES

Supposing you would like to sell your home, there are certain facts which must be disclosed to the next buyer. If the paperwork shows that the contraction projects on the home were carried out buy a contractor who was not insured, the general value of the property could be lowered significantly. Consequently, you will suffer a loss for a property which you had definitely put a lot of work in.

3. DAMAGE TO THIRD PARTY

Apart from the damage that may be caused to the home and the contractor himself, third parties such as passersby or nearby property may be at risk. In the case that a third party has been hurt due to the contractor’s negligence, the burden of awarding damages falls on the homeowner thereby flooding him with even more expenses.

The most essential thing to keep in mind before hiring a contractor is that the safety of your assets come first. Getting an insured contractor saves you from issues like bankruptcy and having to compensate the injured worker during the period of the contract.Reputable contractor companies can easily be found online and they are also quite affordable.