Rehabbing & House Flipping

User Stats

304
Posts
68
Votes
Paul Winka
  • Rental Property Investor
  • St Louis, MO
68
Votes |
304
Posts

Vetting insurance of handmen & other Craiglist contractors.

Paul Winka
  • Rental Property Investor
  • St Louis, MO
Posted Jul 9 2019, 14:57

I know it's a mixed bag hiring off Craigslist. Still, I am trying to hedge my bets regarding certificates of liability insurance for a more skilled but small job. I keep hearing and reading, make sure they have insurance and you're protected and be careful!!! Ok, roger, got it. A good contractor should have solid insurance anyway, so it's sort of like killing two birds with one stone by verifying their insurance.

Trouble is, I don't know how to verify appropriately other than checking the expiration dates and calling the insurance company itself. If the worst happened, I'd hate to find out I am getting sued because one checkbox on the Acord form 25 wasn't checked or if the GC canceled the insurance and I wasn't notified. What if one of the subs gets hurt and not the GC? Or there is a botched job and now it will cost more to repair than before? Do I demand that I be added as additional insured and that a new certificate be issued? These are the types of rhetorical questions I have running through my mind.

So my main question is, what is your SOP for hiring someone new regarding insurance say when I get them on the phone or they email me from my post? Seems like nearly everyone in my area (Missouri / Illinois) uses Acord. What do you look for specifically on that form? Thanks!

User Stats

5,992
Posts
6,241
Votes
Matthew Paul
  • Severna Park, MD
6,241
Votes |
5,992
Posts
Matthew Paul
  • Severna Park, MD
Replied Jul 9 2019, 15:04

No good , real , licensed and insured contractor advertises on craigslist . Especially a GC . Go cheap get cheap . 

User Stats

22,759
Posts
12,762
Votes
Wayne Brooks
  • Real Estate Professional
  • West Palm Beach, FL
12,762
Votes |
22,759
Posts
Wayne Brooks
  • Real Estate Professional
  • West Palm Beach, FL
Replied Jul 9 2019, 15:17

You need a Current (today’s date) Accord Certificate Of insurance sent Directly from the agent to you.

The insurance coverages should be obvious.....General Liability and Workers Comp are what you’re most concerned with. Here in FL at least, if the GC has insurance and his sub doesn’t, the GC’s insurance covers it, since in these situations the liability shi$ rolls uphill.

But to be clear, none of their insurance covers a “botched job” or bad workmanship or disappearing or screwing you.

User Stats

304
Posts
68
Votes
Paul Winka
  • Rental Property Investor
  • St Louis, MO
68
Votes |
304
Posts
Paul Winka
  • Rental Property Investor
  • St Louis, MO
Replied Jul 9 2019, 16:03
Originally posted by @Matthew Paul:

No good , real , licensed and insured contractor advertises on craigslist . Especially a GC . Go cheap get cheap . 

Thanks, Matthew. Just to be clear, I'll be making the gig post to find contractors on CL, I am not calling on ones advertising on CL. Maybe it's the same difference. 

I'd get a GC, but to this point, they either don't return calls or say they won't do a job as small as mine. I wish I had the scale to have my own dedicated handyman, but I don't. 

How do you verify insurance beyond just asking for a certificate? That's what I am trying to learn through my question. 

User Stats

304
Posts
68
Votes
Paul Winka
  • Rental Property Investor
  • St Louis, MO
68
Votes |
304
Posts
Paul Winka
  • Rental Property Investor
  • St Louis, MO
Replied Jul 9 2019, 16:13
Originally posted by @Wayne Brooks:

You need a Current (today’s date) Accord Certificate Of insurance sent Directly from the agent to you.

The insurance coverages should be obvious.....General Liability and Workers Comp are what you’re most concerned with. Here in FL at least, if the GC has insurance and his sub doesn’t, the GC’s insurance covers it, since in these situations the liability shi$ rolls uphill.

But to be clear, none of their insurance covers a “botched job” or bad workmanship or disappearing or screwing you.

Ok, so just call Acord directly, that makes sense. 

How do you then make sure the contractor on the phone is the real guy and not just using information robbed off another GC? Is there data (TIN, past jobs, past claims, start date with Acord, etc) that I could corroborate between Acord and the contractor, or have Acord make a call to the guy with me on the line? 

Is it necessary to be ask to be added as additionally insured? If so, when would that make sense? Thanks!

User Stats

5,992
Posts
6,241
Votes
Matthew Paul
  • Severna Park, MD
6,241
Votes |
5,992
Posts
Matthew Paul
  • Severna Park, MD
Replied Jul 9 2019, 16:41

In my state we have a contractor license board , if I have a active license , I have insurance , if I cancel the insurance they suspend my license .  And there is never a job too small , as a contractor you just charge more for the small jobs . I love the small jobs , in and out in 4 or 5 days , its better money than the 2 or 3 month jobs 

User Stats

22,759
Posts
12,762
Votes
Wayne Brooks
  • Real Estate Professional
  • West Palm Beach, FL
12,762
Votes |
22,759
Posts
Wayne Brooks
  • Real Estate Professional
  • West Palm Beach, FL
Replied Jul 9 2019, 17:01

@Paul Winka Sorry, you don’t “call Accord”.  Accord is just the form insurance companies use to format their insurance certificates.  The contractor calls/emails his insurance agent, that agency sends you the insurance certificate.

User Stats

1,303
Posts
2,131
Votes
Mark Fries
  • Contractor
  • Jacksonville, FL
2,131
Votes |
1,303
Posts
Mark Fries
  • Contractor
  • Jacksonville, FL
Replied Jul 10 2019, 03:17

@Matthew Paul

We have moved to small jobs only...8k-10k and under...I turn down full renovations and rooms additions almost daily...never again will I do a 30 or 60 day project...

User Stats

5,752
Posts
3,835
Votes
Michael Noto
  • Real Estate Agent
  • Southington, CT
3,835
Votes |
5,752
Posts
Michael Noto
  • Real Estate Agent
  • Southington, CT
Replied Jul 10 2019, 04:33

@Paul Winka  Any legit contractor we have ever used sends over their liability insurance cert same or next day after we request it. This is not an abnormal request. You will want to check that their limits for the following line items is sufficient. These are directly copied from a liability insurance cert we requested from an electrical contractor yesterday  

EACH OCCURRENCE

DAMAGE TO RENTED PREMISES (Ea occurrence)

MED EXP (Any one person)

PERSONAL & ADV INJURY

GENERAL AGGREGATE

PRODUCTS - COMP/OP AGG

User Stats

304
Posts
68
Votes
Paul Winka
  • Rental Property Investor
  • St Louis, MO
68
Votes |
304
Posts
Paul Winka
  • Rental Property Investor
  • St Louis, MO
Replied Jul 10 2019, 07:02
Originally posted by @Mark Fries:

@Matthew Paul

We have moved to small jobs only...8k-10k and under...I turn down full renovations and rooms additions almost daily...never again will I do a 30 or 60 day project...

By small job, I mean about 3 or 4 hours of work and under $1000, maybe even $500. It's all relative. I wouldn't hire a $10K job from craigslist. I am just busy and not that handy to do it myself. 

User Stats

304
Posts
68
Votes
Paul Winka
  • Rental Property Investor
  • St Louis, MO
68
Votes |
304
Posts
Paul Winka
  • Rental Property Investor
  • St Louis, MO
Replied Jul 10 2019, 07:06
Originally posted by @Wayne Brooks:

@Paul Winka Sorry, you don’t “call Accord”.  Accord is just the form insurance companies use to format their insurance certificates.  The contractor calls/emails his insurance agent, that agency sends you the insurance certificate.

Whoa, really? I have seen the Acord 25 form and just thought they were some kind of holding company for several smaller insurance affiliates.  This is what I like about BP.

User Stats

22,759
Posts
12,762
Votes
Wayne Brooks
  • Real Estate Professional
  • West Palm Beach, FL
12,762
Votes |
22,759
Posts
Wayne Brooks
  • Real Estate Professional
  • West Palm Beach, FL
Replied Jul 10 2019, 07:14

@Paul Winka You’re not likely to find fully insured contractors for $500-$1000 jobs....particularly from Craigslist.

User Stats

2,239
Posts
1,250
Votes
Jason Bott
  • Insurance Agent
  • Milwaukee, WI
1,250
Votes |
2,239
Posts
Jason Bott
  • Insurance Agent
  • Milwaukee, WI
Replied Jul 10 2019, 07:47
Originally posted by @Paul Winka:

I know it's a mixed bag hiring off Craigslist. Still, I am trying to hedge my bets regarding certificates of liability insurance for a more skilled but small job. I keep hearing and reading, make sure they have insurance and you're protected and be careful!!! Ok, roger, got it. A good contractor should have solid insurance anyway, so it's sort of like killing two birds with one stone by verifying their insurance.

Trouble is, I don't know how to verify appropriately other than checking the expiration dates and calling the insurance company itself. If the worst happened, I'd hate to find out I am getting sued because one checkbox on the Acord form 25 wasn't checked or if the GC canceled the insurance and I wasn't notified. What if one of the subs gets hurt and not the GC? Or there is a botched job and now it will cost more to repair than before? Do I demand that I be added as additional insured and that a new certificate be issued? These are the types of rhetorical questions I have running through my mind.

So my main question is, what is your SOP for hiring someone new regarding insurance say when I get them on the phone or they email me from my post? Seems like nearly everyone in my area (Missouri / Illinois) uses Acord. What do you look for specifically on that form? Thanks!

 Paul, I put this piece of content toghter for this exact question.  Hopefully it helps.

Vendor Risk

There are 2 business relationships a REI has that can cost you big $ if you do not have proper procedures to insure THEY have the correct insurance coverages in place. Contractor and Property Manager.

Contractor

Every landlord will need to hire a contractor at some point to get work done on a property. In order to save yourself HUGE out of pocket costs, it is vital that you take control of the 3 major risks you have when a contractor is working on your property.

.

  • 1)Contractor damage they don’t want to pay for. Any claim they do not want to accept responsibility for.
  • 2) Assuming they have coverage – The coverage you and the contractor think they have, and what they actually have, may be worlds apart.
  • 3)Future claims stemming from faulty workmanship. Example - The new roof from last year starts leaking, causing large damage inside the building and the contractor is not responding.

It is vital that you have the correct processes and contracts in place before work starts. If you don’t, you can kiss your $ good buy, because,

  • It’s impossible to get insurance coverage for a claim after it’s happened
  • Suing the contractor will take years. and even if you win, they will probably never have the ability to pay you back.

So how do you protect yourself on the front end?

Do these 3 things before hiring your next contractor to greatly reduce your risks.

  • 1)Create a list of Insurance coverages and limits you require for any contractor working with you.
  • 2)Require you are listed as an “Additional Insured” to their policy.
  • 3)Work cannot start until you have a signed contract and certificate of insurance from their insurance agent (note: this is very important. I have had some of my own clients cancel their policies, to find out years later they doctored the date on the certificate of insurance and were using it with their clients as proof of insurance).

WAIT, what about the uninsured Handyman

It’s very common to have a handyman who does good work but does not have insurance. In this case, you have 3 choices;

  • 1)They operate as an employee – meaning, you have no recourse if they cause damage. You are 100% responsible.
  • 2)Have them work though another contractor on site as a subcontractor/employee of theirs.
  • 3)Have them get insurance at a lesser limit. Possibly just a general liability policy.

Example of insurance requirements from a sample Independant Contractor agreement I have for my REI clients,

Schedule A

Work to be performed

This Agreement shall cover the following projects at the following locations:

________________________________________________________________________

Insurance Limits Examples

  1. Workers Compensation (Statutory) and Employer’s Liability:

$100,000 each accident for bodily injury by accident; $100,000 each employee for bodily injury by disease; $500,000 policy limit for bodily injury by disease.

  1. General Liability Insurance (CGL):

Commercial general liability on an occurrence coverage form. The limits of liability shall not be less than:

$1,000,000 each occurrence (combined single limit for bodily injury and property damage);

$1,000,000 for personal and advertising injury liability;

$1,000,000 aggregate on products and completed operations;

$2,000,000 general aggregate.

Additional Insured Endorsement: Additional insured coverage should be requested to include the Manager, and any other party, as may be required.

  1. Automobile Liability Insurance:

$1,000,000 Combined single limit each accident for bodily injury and property damage. Include coverage on all owned, hired, and nonowned automobiles.

  1. Certificates of Insurance:

Trade Contractor shall furnish certificates of Insurance and applicable endorsements to Contractor before Trade Contractor commences any work.

  1. Insurance Requirements for Sub-Trade Contractors: Trade Contractor shall ensure that all tiers of his Sub-Trade Contractors shall maintain insurance in like form and amounts, including the Additional Insured requirements. Each Sub-Trade Contractor shall provide Certificates of Insurance and applicable endorsements to the Trade Contractor prior to the start of the Sub-Trade Contractor’s work on this project.

User Stats

751
Posts
465
Votes
George Skidis
  • Rental Property Investor
  • Belleville, IL
465
Votes |
751
Posts
George Skidis
  • Rental Property Investor
  • Belleville, IL
Replied Jul 10 2019, 08:14

Never accept proof of insurance directly from the contractor as the be all end all. A little white out and a copy machine can put you at risk.

ALWAYS contact the insurance agent on the accord form. ASK for proof of insurance. Ask if the policy in question covers the scope of proposed work. Take notes. RECORD who you spoke with. Date, Time and Questions Asked. They should send you the proof. Keep good notes. If a claim is later denied they may be your only avenue in an errors and ommissions claim against the agent.

Once established you can be placed on annual notice status. We get updated forms and proof each year, DIRECT from the company. We recieve them from our regular lawn care, plumber and electrician. Roofers come and go so that is an as needed basis.

Financial Advisor Illinois (#NPN 951878)

User Stats

205
Posts
145
Votes
Michael Norris
  • Specialist
  • Strongsville, OH
145
Votes |
205
Posts
Michael Norris
  • Specialist
  • Strongsville, OH
Replied Jul 10 2019, 10:02

I flip houses & I'm also an insurance agent who insures a lot of investors.

My flip company sometimes does 3rd party work like kitchen and bathroom remodels for homeowners.

I say that because I operate on all sides of this situation.

What you are seeing is the reality of REI unfortunately.

Rentals need to cash flow / Flippers need the most cost effective rehab they can find.

Hiring legit insured contractors (if you can even find one who isn't booked 6 months out) slows down the process and costs a LOT more because... well... they are legit and have insurance, pay taxes, own vehicles & equipment, etc. The day labor guys are cheap because they don't have the overhead a legit business owner does.

Hiring day labor is what a lot of "us" do - I'm guilty of it too.

But what a lot of investors don't understand is that day laborers are YOUR employees according to most states* (this is not legal advice seek an attorney for advice on your state).  If they get hurt on the job and use their own personal health insurance you can still have an issue. Based on the interview of the injured person at time of medical care their health insurance company may try and subrogate against the state work comp program. You have Work Comp insurance right? No - Get ready for some uncomfortable phone calls with state work comp enforcement employees.

Other than getting your own Work Comp & General Liability Policies there is a gap in coverage when you own the property AND hire laborers. (Also... Getting General Liability can be difficult if you are both property owner and acting as your own General Contractor). This can add a couple thousand dollars to your annual cost of doing business above and beyond what it costs to insure the property itself and many investors don't / won't commit to that expense.

There is nothing wrong with being "Self Insured" as long as you understand the risk you are taking and willing to deal with the consequences if something goes wrong.

My Advice:

Buy your insurance from agents who know about REI and can coach you on what the gaps in coverage are and then you decide what your level of risk tolerance is.

Before you ask...I only handle insurance in Ohio but there are several competent agents on BP I see giving out solid advice and who can handle other states.  

Work with a competent attorney familiar with REI issues who can coach you on liability releases that may help shield you from day labor issues - nothing is bullet proof but getting something up front is better than nothing.

User Stats

6,023
Posts
9,434
Votes
Dennis M.
  • Rental Property Investor
  • Erie, pa
9,434
Votes |
6,023
Posts
Dennis M.
  • Rental Property Investor
  • Erie, pa
Replied Jul 10 2019, 14:11

I’ve had better luck hiring handymen than pro contractors and I’ve saved $ thousands doing it . Get yourself a trusted handyman that works for 15$ an hour is my advice

User Stats

304
Posts
68
Votes
Paul Winka
  • Rental Property Investor
  • St Louis, MO
68
Votes |
304
Posts
Paul Winka
  • Rental Property Investor
  • St Louis, MO
Replied Jul 10 2019, 16:54
Originally posted by @Dennis M.:

I’ve had better luck hiring handymen than pro contractors and I’ve saved $ thousands doing it . Get yourself a trusted handyman that works for 15$ an hour is my advice

Dennis, that's my gut feeling too regarding your advice for the small one-off jobs. 

Either I need to get the skills and block the time to do the work myself (not likely I'll get there soon and surely not the best use of my time for now) or vet contractors that can do the job and take a small but potentially serious risk. 

I mentioned above that even if I want to pay more for an insured, experienced guy, they don't take on jobs so small. Maybe I am calling the wrong contractors or just need to be prepared to wait a few weeks or wait until summer is over? But that doesn't work so well either, I am nervous with this C-class house sitting empty for too long. There are no easy, obvious solutions. 

At this point, I don't have enough work with just one house to have a guy working for me on the regular...but I'd like to have a guy "on call". Baby steps and I'll get there. It's good practice beating the streets and learning the right questions to ask though.

User Stats

304
Posts
68
Votes
Paul Winka
  • Rental Property Investor
  • St Louis, MO
68
Votes |
304
Posts
Paul Winka
  • Rental Property Investor
  • St Louis, MO
Replied Jul 10 2019, 17:09
Originally posted by @Michael Norris:

I flip houses & I'm also an insurance agent who insures a lot of investors.

My flip company sometimes does 3rd party work like kitchen and bathroom remodels for homeowners.

I say that because I operate on all sides of this situation.

What you are seeing is the reality of REI unfortunately.

Rentals need to cash flow / Flippers need the most cost effective rehab they can find.

Hiring legit insured contractors (if you can even find one who isn't booked 6 months out) slows down the process and costs a LOT more because... well... they are legit and have insurance, pay taxes, own vehicles & equipment, etc. The day labor guys are cheap because they don't have the overhead a legit business owner does.

Hiring day labor is what a lot of "us" do - I'm guilty of it too.

But what a lot of investors don't understand is that day laborers are YOUR employees according to most states* (this is not legal advice seek an attorney for advice on your state).  If they get hurt on the job and use their own personal health insurance you can still have an issue. Based on the interview of the injured person at time of medical care their health insurance company may try and subrogate against the state work comp program. You have Work Comp insurance right? No - Get ready for some uncomfortable phone calls with state work comp enforcement employees.

Other than getting your own Work Comp & General Liability Policies there is a gap in coverage when you own the property AND hire laborers. (Also... Getting General Liability can be difficult if you are both property owner and acting as your own General Contractor). This can add a couple thousand dollars to your annual cost of doing business above and beyond what it costs to insure the property itself and many investors don't / won't commit to that expense.

There is nothing wrong with being "Self Insured" as long as you understand the risk you are taking and willing to deal with the consequences if something goes wrong.

My Advice:

Buy your insurance from agents who know about REI and can coach you on what the gaps in coverage are and then you decide what your level of risk tolerance is.

Before you ask...I only handle insurance in Ohio but there are several competent agents on BP I see giving out solid advice and who can handle other states.  

Work with a competent attorney familiar with REI issues who can coach you on liability releases that may help shield you from day labor issues - nothing is bullet proof but getting something up front is better than nothing.

Michael, good information & advice, thanks. I am trying to unpack what you said a bit more.

So about $2000 is the going rate for a year of coverage for an investor gap policy for WC & GL? Would you have an Acord certificate to post here about what that would like, perhaps redacting it as needed?

And how would you differentiate the risk between a tenant that slips & falls down the stairs from a day laborer that slips and falls of the roof, with either taking action against the landlord / investor?

I would say the former is more likely to happen since the tenants are living there but the day laborers are only there for just a few hours. 

User Stats

304
Posts
68
Votes
Paul Winka
  • Rental Property Investor
  • St Louis, MO
68
Votes |
304
Posts
Paul Winka
  • Rental Property Investor
  • St Louis, MO
Replied Jul 10 2019, 17:44
Originally posted by @Jason Bott:
Originally posted by @Paul Winka:

I know it's a mixed bag hiring off Craigslist. Still, I am trying to hedge my bets regarding certificates of liability insurance for a more skilled but small job. I keep hearing and reading, make sure they have insurance and you're protected and be careful!!! Ok, roger, got it. A good contractor should have solid insurance anyway, so it's sort of like killing two birds with one stone by verifying their insurance.

Trouble is, I don't know how to verify appropriately other than checking the expiration dates and calling the insurance company itself. If the worst happened, I'd hate to find out I am getting sued because one checkbox on the Acord form 25 wasn't checked or if the GC canceled the insurance and I wasn't notified. What if one of the subs gets hurt and not the GC? Or there is a botched job and now it will cost more to repair than before? Do I demand that I be added as additional insured and that a new certificate be issued? These are the types of rhetorical questions I have running through my mind.

So my main question is, what is your SOP for hiring someone new regarding insurance say when I get them on the phone or they email me from my post? Seems like nearly everyone in my area (Missouri / Illinois) uses Acord. What do you look for specifically on that form? Thanks!

 Paul, I put this piece of content toghter for this exact question.  Hopefully it helps.

Vendor Risk

There are 2 business relationships a REI has that can cost you big $ if you do not have proper procedures to insure THEY have the correct insurance coverages in place. Contractor and Property Manager.

Contractor

Every landlord will need to hire a contractor at some point to get work done on a property. In order to save yourself HUGE out of pocket costs, it is vital that you take control of the 3 major risks you have when a contractor is working on your property.

.

  • 1)Contractor damage they don’t want to pay for. Any claim they do not want to accept responsibility for.
  • 2) Assuming they have coverage – The coverage you and the contractor think they have, and what they actually have, may be worlds apart.
  • 3)Future claims stemming from faulty workmanship. Example - The new roof from last year starts leaking, causing large damage inside the building and the contractor is not responding.

It is vital that you have the correct processes and contracts in place before work starts. If you don’t, you can kiss your $ good buy, because,

  • It’s impossible to get insurance coverage for a claim after it’s happened
  • Suing the contractor will take years. and even if you win, they will probably never have the ability to pay you back.

So how do you protect yourself on the front end?

Do these 3 things before hiring your next contractor to greatly reduce your risks.

  • 1)Create a list of Insurance coverages and limits you require for any contractor working with you.
  • 2)Require you are listed as an “Additional Insured” to their policy.
  • 3)Work cannot start until you have a signed contract and certificate of insurance from their insurance agent (note: this is very important. I have had some of my own clients cancel their policies, to find out years later they doctored the date on the certificate of insurance and were using it with their clients as proof of insurance).

WAIT, what about the uninsured Handyman

It’s very common to have a handyman who does good work but does not have insurance. In this case, you have 3 choices;

  • 1)They operate as an employee – meaning, you have no recourse if they cause damage. You are 100% responsible.
  • 2)Have them work though another contractor on site as a subcontractor/employee of theirs.
  • 3)Have them get insurance at a lesser limit. Possibly just a general liability policy.

Example of insurance requirements from a sample Independant Contractor agreement I have for my REI clients,

Schedule A

Work to be performed

This Agreement shall cover the following projects at the following locations:

________________________________________________________________________

Insurance Limits Examples

  1. Workers Compensation (Statutory) and Employer’s Liability:

$100,000 each accident for bodily injury by accident; $100,000 each employee for bodily injury by disease; $500,000 policy limit for bodily injury by disease.

  1. General Liability Insurance (CGL):

Commercial general liability on an occurrence coverage form. The limits of liability shall not be less than:

$1,000,000 each occurrence (combined single limit for bodily injury and property damage);

$1,000,000 for personal and advertising injury liability;

$1,000,000 aggregate on products and completed operations;

$2,000,000 general aggregate.

Additional Insured Endorsement: Additional insured coverage should be requested to include the Manager, and any other party, as may be required.

  1. Automobile Liability Insurance:

$1,000,000 Combined single limit each accident for bodily injury and property damage. Include coverage on all owned, hired, and nonowned automobiles.

  1. Certificates of Insurance:

Trade Contractor shall furnish certificates of Insurance and applicable endorsements to Contractor before Trade Contractor commences any work.

  1. Insurance Requirements for Sub-Trade Contractors: Trade Contractor shall ensure that all tiers of his Sub-Trade Contractors shall maintain insurance in like form and amounts, including the Additional Insured requirements. Each Sub-Trade Contractor shall provide Certificates of Insurance and applicable endorsements to the Trade Contractor prior to the start of the Sub-Trade Contractor’s work on this project.

Your post was so helpful, I'd give gold, but this isn't reddit so an upvote will have to do. Would you be willing to PM or email me your Independent Contractor Agreement? 

User Stats

24,429
Posts
16,179
Votes
James Wise
  • Real Estate Broker
  • Cleveland, OH
16,179
Votes |
24,429
Posts
James Wise
  • Real Estate Broker
  • Cleveland, OH
Replied Jul 10 2019, 17:56
Originally posted by @Paul Winka:

I know it's a mixed bag hiring off Craigslist. Still, I am trying to hedge my bets regarding certificates of liability insurance for a more skilled but small job. I keep hearing and reading, make sure they have insurance and you're protected and be careful!!! Ok, roger, got it. A good contractor should have solid insurance anyway, so it's sort of like killing two birds with one stone by verifying their insurance.

Trouble is, I don't know how to verify appropriately other than checking the expiration dates and calling the insurance company itself. If the worst happened, I'd hate to find out I am getting sued because one checkbox on the Acord form 25 wasn't checked or if the GC canceled the insurance and I wasn't notified. What if one of the subs gets hurt and not the GC? Or there is a botched job and now it will cost more to repair than before? Do I demand that I be added as additional insured and that a new certificate be issued? These are the types of rhetorical questions I have running through my mind.

So my main question is, what is your SOP for hiring someone new regarding insurance say when I get them on the phone or they email me from my post? Seems like nearly everyone in my area (Missouri / Illinois) uses Acord. What do you look for specifically on that form? Thanks!

 G/C's advertising on Craigslist aren't what I would consider actually G/C's. More so handymen, day laborers, jack of all trades, minute men types....Pros to hiring guys like that is they are cheap and able to work soon. Cons are that there are major reasons why they are cheap and able to work soon. Typically drug use, felonies & alcohol abuse are major concerns with this crowd of dudes.

User Stats

432
Posts
222
Votes
Account Closed
  • Contractor
  • San Diego, CA
222
Votes |
432
Posts
Account Closed
  • Contractor
  • San Diego, CA
Replied Jul 11 2019, 00:42

@Paul Winka in regards to what’s already been said, you’re going to have a hard enough time just finding real skill on Craigslist. It’s very time consuming going through guys and takes experience in how to ask the right questions and weed out tons of other calls. Very often you have to have a handyman or laborer come out for just a day or two to find out they suck pr have really faulty tools. Good guys for small detailed work are HARD to find right now. As for the price of $15hr, I’d say they will not be very good in St. Louis for that since it’s a big union city. Most guys in St. Louis can easily pick up under the table work around there for $20hr or more off craigslist. I should know, because I did it 4 times when I moved there a few years ago, before getting hired in as a journeyman level commercial carpenter in the union. You can find what you’re looking for, but it will take a long time to find it. For jobs really small it may save you more time to get on YouTube and do it yourself. Thanks for the insurance information, and good posts everyone.

User Stats

135
Posts
122
Votes
Renee Yarbrough
  • Flipper/Rehabber
  • Chattanooga, TN
122
Votes |
135
Posts
Renee Yarbrough
  • Flipper/Rehabber
  • Chattanooga, TN
Replied Jul 11 2019, 02:45

Thanks for this detailed response, @Jason Bott. I'm meeting with GC's today to get bids for a job on a rental, and this is invaluable information.

User Stats

2,239
Posts
1,250
Votes
Jason Bott
  • Insurance Agent
  • Milwaukee, WI
1,250
Votes |
2,239
Posts
Jason Bott
  • Insurance Agent
  • Milwaukee, WI
Replied Jul 11 2019, 08:53

@Renee Yarbrough glad I could help.

User Stats

2,239
Posts
1,250
Votes
Jason Bott
  • Insurance Agent
  • Milwaukee, WI
1,250
Votes |
2,239
Posts
Jason Bott
  • Insurance Agent
  • Milwaukee, WI
Replied Jul 11 2019, 08:55
Originally posted by @Paul Winka:
Originally posted by @Jason Bott:
Originally posted by @Paul Winka:

I know it's a mixed bag hiring off Craigslist. Still, I am trying to hedge my bets regarding certificates of liability insurance for a more skilled but small job. I keep hearing and reading, make sure they have insurance and you're protected and be careful!!! Ok, roger, got it. A good contractor should have solid insurance anyway, so it's sort of like killing two birds with one stone by verifying their insurance.

Trouble is, I don't know how to verify appropriately other than checking the expiration dates and calling the insurance company itself. If the worst happened, I'd hate to find out I am getting sued because one checkbox on the Acord form 25 wasn't checked or if the GC canceled the insurance and I wasn't notified. What if one of the subs gets hurt and not the GC? Or there is a botched job and now it will cost more to repair than before? Do I demand that I be added as additional insured and that a new certificate be issued? These are the types of rhetorical questions I have running through my mind.

So my main question is, what is your SOP for hiring someone new regarding insurance say when I get them on the phone or they email me from my post? Seems like nearly everyone in my area (Missouri / Illinois) uses Acord. What do you look for specifically on that form? Thanks!

 Paul, I put this piece of content toghter for this exact question.  Hopefully it helps.

Vendor Risk

There are 2 business relationships a REI has that can cost you big $ if you do not have proper procedures to insure THEY have the correct insurance coverages in place. Contractor and Property Manager.

Contractor

Every landlord will need to hire a contractor at some point to get work done on a property. In order to save yourself HUGE out of pocket costs, it is vital that you take control of the 3 major risks you have when a contractor is working on your property.

.

  • 1)Contractor damage they don’t want to pay for. Any claim they do not want to accept responsibility for.
  • 2) Assuming they have coverage – The coverage you and the contractor think they have, and what they actually have, may be worlds apart.
  • 3)Future claims stemming from faulty workmanship. Example - The new roof from last year starts leaking, causing large damage inside the building and the contractor is not responding.

It is vital that you have the correct processes and contracts in place before work starts. If you don’t, you can kiss your $ good buy, because,

  • It’s impossible to get insurance coverage for a claim after it’s happened
  • Suing the contractor will take years. and even if you win, they will probably never have the ability to pay you back.

So how do you protect yourself on the front end?

Do these 3 things before hiring your next contractor to greatly reduce your risks.

  • 1)Create a list of Insurance coverages and limits you require for any contractor working with you.
  • 2)Require you are listed as an “Additional Insured” to their policy.
  • 3)Work cannot start until you have a signed contract and certificate of insurance from their insurance agent (note: this is very important. I have had some of my own clients cancel their policies, to find out years later they doctored the date on the certificate of insurance and were using it with their clients as proof of insurance).

WAIT, what about the uninsured Handyman

It’s very common to have a handyman who does good work but does not have insurance. In this case, you have 3 choices;

  • 1)They operate as an employee – meaning, you have no recourse if they cause damage. You are 100% responsible.
  • 2)Have them work though another contractor on site as a subcontractor/employee of theirs.
  • 3)Have them get insurance at a lesser limit. Possibly just a general liability policy.

Example of insurance requirements from a sample Independant Contractor agreement I have for my REI clients,

Schedule A

Work to be performed

This Agreement shall cover the following projects at the following locations:

________________________________________________________________________

Insurance Limits Examples

  1. Workers Compensation (Statutory) and Employer’s Liability:

$100,000 each accident for bodily injury by accident; $100,000 each employee for bodily injury by disease; $500,000 policy limit for bodily injury by disease.

  1. General Liability Insurance (CGL):

Commercial general liability on an occurrence coverage form. The limits of liability shall not be less than:

$1,000,000 each occurrence (combined single limit for bodily injury and property damage);

$1,000,000 for personal and advertising injury liability;

$1,000,000 aggregate on products and completed operations;

$2,000,000 general aggregate.

Additional Insured Endorsement: Additional insured coverage should be requested to include the Manager, and any other party, as may be required.

  1. Automobile Liability Insurance:

$1,000,000 Combined single limit each accident for bodily injury and property damage. Include coverage on all owned, hired, and nonowned automobiles.

  1. Certificates of Insurance:

Trade Contractor shall furnish certificates of Insurance and applicable endorsements to Contractor before Trade Contractor commences any work.

  1. Insurance Requirements for Sub-Trade Contractors: Trade Contractor shall ensure that all tiers of his Sub-Trade Contractors shall maintain insurance in like form and amounts, including the Additional Insured requirements. Each Sub-Trade Contractor shall provide Certificates of Insurance and applicable endorsements to the Trade Contractor prior to the start of the Sub-Trade Contractor’s work on this project.

Your post was so helpful, I'd give gold, but this isn't reddit so an upvote will have to do. Would you be willing to PM or email me your Independent Contractor Agreement? 

Paul, thanks for the kind words.

I have a sample IC agreement that you can reference.  It was written by a lawyer with respects to WI & IL law, so you will want to have it reviewed by your local lawyer.

User Stats

304
Posts
68
Votes
Paul Winka
  • Rental Property Investor
  • St Louis, MO
68
Votes |
304
Posts
Paul Winka
  • Rental Property Investor
  • St Louis, MO
Replied Jul 11 2019, 16:34
Originally posted by @Jonathan Greer:

@Paul Winka in regards to what’s already been said, you’re going to have a hard enough time just finding real skill on Craigslist. It’s very time consuming going through guys and takes experience in how to ask the right questions and weed out tons of other calls. Very often you have to have a handyman or laborer come out for just a day or two to find out they suck pr have really faulty tools. Good guys for small detailed work are HARD to find right now. As for the price of $15hr, I’d say they will not be very good in St. Louis for that since it’s a big union city. Most guys in St. Louis can easily pick up under the table work around there for $20hr or more off craigslist. I should know, because I did it 4 times when I moved there a few years ago, before getting hired in as a journeyman level commercial carpenter in the union. You can find what you’re looking for, but it will take a long time to find it. For jobs really small it may save you more time to get on YouTube and do it yourself. Thanks for the insurance information, and good posts everyone.

Michael, just curious why you mentioned $15/hr, $20/hr in your post. For whatever the odd job I'd need done would be, isn't is easier and wiser to ask for a fixed price to do the job? Seems like a lot of BS would be avoided that way. Like the vegetation removal job I had done by CL guys this week, I put up a YouTube video of the job in the ad. I got at least 30 text and calls on it. Prices ranged from $50 to $1200.

I am just guessing what you meant by the hourly rate is that it is a way to reverse-engineer the basis for what it might cost to do something, so a 5-hour vegetation removal job for 2 guys would be 5 x $20 X 2 = $200. Oddly enough, that's what I paid for two guys to do the job and it took them 5 hours. LOL

User Stats

432
Posts
222
Votes
Account Closed
  • Contractor
  • San Diego, CA
222
Votes |
432
Posts
Account Closed
  • Contractor
  • San Diego, CA
Replied Jul 11 2019, 20:01

@Paul Winka somebody else mentioned you should find someone for $15hr, so I was saying that’s not as easy in St. Louis because of the union. I did forget though that there are some real fighters for the Craigslist space in St. Louis, so finding a real contractor on there is possible maybe... I just scheduled a guy from Asheville to work as a handyman in TN for $30hr. I like to hire skill, and pay more, but I’m not hedging the bushes, we’re finishing a house out on a full remodel. Hope it works, but I plan for it not to also, based on the sketchy nature of craigslist. Sometimes you can just tell by talking to someone and the way they follow up promptly and take initiative that you might have a winner on the hook.