How do you handle insurance for your contractors?

Question

So, I'm getting ready to hire some contractors, not sure if they are license or not, some of the contractors were refer to me by realtors, and friends.

How do you handle insurance should something happen to one of them?

Joe Bertolino · Answer

Consult an attorney and certified risk manager familiar with your state but here are the basics:

1. Have a real written contract,  the AGC and ABC have samples you can use as a template.
2. Check the CSLB to confirm they are licensed and bonded. The CSLB also has their Workers' Comp info on file.  Background check them on BBB and other review sources.  
3. Have the subs provide a certificate of insurance naming you as additional insured with the broadest AI endorsement (CG2010 11 85), primary wording and a waiver of subrogation for their general liabity, auto and workers comp coverage.
3. Request to have the "endeavor to but failure to" wording stricken from the certificate and that you want a 30 notice of cancellation/10 day for non payment.  This way you will be notified if their coverage lapses.

John Chapman · Answer

Bruce L.  For what it's worth, it really depends on the state you live in.  California, for example, is horrible compared to Texas, where the standard to hold a property owner liable for a contractor's negligence is exceptionally difficult.  Realize that's kind of a wimpy answer, but before you start requiring licenses, bonding, and insurance, I would figure out your state's laws and your actual potential liability.

Todd V. · Answer

Bruce it appears your in Nevada so you'll need to go to this website nscb.state.nv.us. Check to make sure what is required for your state, surety bond and liability insurance are two different things. Also make sure they care Workers Compensation Insurance, there are numerous court cases have ruled the hiring party is responsible for injuries to independent contractor’s employees when the independent contractor did not have their own WC insurance.

The information above will set you in the right path. I would also call the insurance companies once you find out who they are. Best of Luck hope it helps.

Karen Margrave · Answer

Bruce L.  In California you can go to the Contractors License Board website and check for licensing and bond. You can also see the history of the bond, that shows if any claims were paid out. Ask for liability insurance, as the contractor for a copy of theirs and look at the expiration date.

Also, if they don't have any employees, either doing the work themselves, or hiring licensed subs, they don't have to have workmans comp.

Steve Babiak · Answer

Read links I supplied earlier, explaining about certificates of insurance and that you are to be named as certificate holder or additional insured.

Chris Clothier · Answer

Bruce L. You want to be bonded under any companies workmans comp insurance.  For those that are not insured, you want to carry your own workmans comp policy which is usually very inexpensive.  You verify that they have license, bond insurance when they provide you with the certificate showing it current.  Just like you carry auto insurance certificates in your car showing you are current, if they are licensed and insured, they will be able to get you a certificate showing it is current.

Bruce L. · Answer

Thanks Karen M.

How do you verify they are licensed, bonded and insured?

Karen Margrave · Answer

Bruce L. In that case you need to talk to your insurance agent and make sure you have liability insurance, and ask them for anything else that may be required in your area. If you aren't knowledgable in construction make sure you use licensed subs, that are bonded. However; usually when you act as your own general, and permits are in your name, you are assuming all liability for work being done. Check with your building department for specifics in your area.

Bruce L. · Answer

I would be the GC.

Karen Margrave · Answer

Bruce L. First you should check to see if your contractors are licensed, bonded and insured.  Are you hiring a general contractor that will be overseeing all the other trades, or are you acting as the general?

How do you handle insurance for your contractors?

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