Rehabbing & House Flipping

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Paul Winka
  • Rental Property Investor
  • St Louis, MO
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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!

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Matt M.
  • Contractor
  • Easton, PA
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Matt M.
  • Contractor
  • Easton, PA
Replied Jul 12 2019, 04:13

I have been in business for almost 16 years. I’ve done everything from hanging a mirror to full remodels/flips/$40-50k jobs. Other than working for a PM on a commercial property, if I’ve been asked for proof of insurance 5 times in 16 years that’s a lot.

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Robert Ombres
  • Real Estate Broker
  • Asheville, NC
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Robert Ombres
  • Real Estate Broker
  • Asheville, NC
Replied Jul 12 2019, 06:49

@Account Closed what part of TN are they traveling to? It scares me that someone from this market is going to travel that far for $30/hour. Frankly, that price is cheap for doing local work here and if they're traveling more than 30 minutes...why? Contractors are busy here and turn down jobs. They're able to charge higher rates and work 20 minutes from their home. I hope your finished product doesn't suffer.

Real Estate Agent North Carolina (#294111)

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Replied Jul 12 2019, 07:06
Originally posted by @Matt Michaelson:

I have been in business for almost 16 years. I’ve done everything from hanging a mirror to full remodels/flips/$40-50k jobs. Other than working for a PM on a commercial property, if I’ve been asked for proof of insurance 5 times in 16 years that’s a lot.

Interesting thread. Matt, looks like clients not knowing anything about insurance is typical around the country. Most probably don't know what they are looking at.

Just a comment too, reading this thread. This whole insurance thing...I dunno...if a grown man/woman from CL or elsewhere takes a job and due to his own negligence (maybe on drugs, maybe not, who knows) gets hurts on my driveway, roof, or whatever, then wants to sue me because he doesn't have insurance, that just doesn't seem right that the owner would be liable. If I were the contractor, even if I had it as a remedy to sue the owner, I wouldn't feel right about it. 

@Jason Bott@Michael Norris

Why wouldn't a liability release for bodily injury work for guys hired off of CL?

If one goes skydiving, they have liability releases to avoid lawsuits, or is this comparing apples and oranges? 

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Matt M.
  • Contractor
  • Easton, PA
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Matt M.
  • Contractor
  • Easton, PA
Replied Jul 12 2019, 07:13

@Larry Bowers

I’m not sure a liability release would do much. I plow snow in the winter, added residential coverage to my commercial auto policy to protect me if I hit a mailbox, garage door, etc. This was like $50.

My policy does not cover me for commercial lots.. slip and falls, etc. Even if I had the commercial lot owner sign a hold harmless, it wouldn’t help me. My wife is an insurance underwriter, these were words from her and my agent. Risking my house because some fool slips isn’t something I’m interested in. Adding commercial plowing was a few thousand because of slip and fall lawsuits etc.

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Account Closed
  • Contractor
  • San Diego, CA
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Account Closed
  • Contractor
  • San Diego, CA
Replied Jul 12 2019, 09:08

@Robert Ombres well that was his premise on why he should be hired was his good deal. Thing about the is, the local small contractors generally DO NOT show up when they say they will around here. I wouldn’t generalize these guys unless multiple people had told me this and it’s happened already at least 4 times. Contractors are spoiled around here, but that means I have to roll up my sleeves and work harder. A flip has to get done one way or another and that’s what hustle is all about to me. Finding stuff out of thin air to make ends meet when it’s not readily available. I’m in Greeneville, Tn. Nice to see someone nearby comment.

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Jon A.
  • Asheville, NC
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Jon A.
  • Asheville, NC
Replied Jul 12 2019, 09:27

I work as a handyman and charge $35/hr. I have only been asked once about insurance in the last 15 years. I can do anything short of rewiring a home. I have built 600 sq ft building for people and I have done tiny repairs also.  I have been offered many jobs by contractors in my area but the top pay is about $25/hr and then you are a sub. So after taxes you are at about $18/hr and then take off the "ghost insurance policy" that costs about $3k per year and wear and tear on your truck, tools, gas ,etc. and you really aren't making any money for a very physical job. I have considered getting my GC license for several years but I really don't see the point. By definition, a handy man can do any job under $35k. I suppose I could specialize and only do one thing and just charge more for it but I am pretty happy where I am at. It affords me flexibility of time to manage my own properties and set my own hours and I don't have to manage people. I understand the question about insurance and I understand peoples concerns about it but I tend to stay booked up a few weeks out and when work falls short I can usually call some GC people I know and pick up work. I guess my point is that there are reliable people out there that do quality work in the trades you just have to find them. You also have to pay them. There really isn't any such thing as fast and cheap and good. I don't even have a business card for carpentry/handyman work and I don't advertise anywhere. All my business is word of mouth. I am just as skeptical of homeowners that I do not know as you probably are of that handyman that you don't know. There is definitely a trust factor there between the homeowner and myself. If a job is too high off the ground or I feel compromised I just tell them they should call a contractor and pay those prices but I am also aware that the contractor will just sub it out to someone like myself and take their cut after they mark up the materials. Don't get me wrong, there is a time and a place for insurance and contractors but there is also a huge void in the trades for quality work that isn't overpriced. Especially for the smaller jobs that keep me employed. If i bid a job it will always be more than if I do it by the hour. I have to take into account anything that could go wrong and all of the unknowns must be accounted for whether they come up or not. Most people hire me by the hour after we have a conversation. I have seen a lot of bad contractors out there and I have seen some great ones. It's all about reputation. 

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Paul Winka
  • Rental Property Investor
  • St Louis, MO
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Paul Winka
  • Rental Property Investor
  • St Louis, MO
Replied Jul 12 2019, 16:27
Originally posted by @Jon Arsenault:

I work as a handyman and charge $35/hr. I have only been asked once about insurance in the last 15 years. I can do anything short of rewiring a home. I have built 600 sq ft building for people and I have done tiny repairs also.  I have been offered many jobs by contractors in my area but the top pay is about $25/hr and then you are a sub. So after taxes you are at about $18/hr and then take off the "ghost insurance policy" that costs about $3k per year and wear and tear on your truck, tools, gas ,etc. and you really aren't making any money for a very physical job. I have considered getting my GC license for several years but I really don't see the point. By definition, a handy man can do any job under $35k. I suppose I could specialize and only do one thing and just charge more for it but I am pretty happy where I am at. It affords me flexibility of time to manage my own properties and set my own hours and I don't have to manage people. I understand the question about insurance and I understand peoples concerns about it but I tend to stay booked up a few weeks out and when work falls short I can usually call some GC people I know and pick up work. I guess my point is that there are reliable people out there that do quality work in the trades you just have to find them. You also have to pay them. There really isn't any such thing as fast and cheap and good. I don't even have a business card for carpentry/handyman work and I don't advertise anywhere. All my business is word of mouth. I am just as skeptical of homeowners that I do not know as you probably are of that handyman that you don't know. There is definitely a trust factor there between the homeowner and myself. If a job is too high off the ground or I feel compromised I just tell them they should call a contractor and pay those prices but I am also aware that the contractor will just sub it out to someone like myself and take their cut after they mark up the materials. Don't get me wrong, there is a time and a place for insurance and contractors but there is also a huge void in the trades for quality work that isn't overpriced. Especially for the smaller jobs that keep me employed. If i bid a job it will always be more than if I do it by the hour. I have to take into account anything that could go wrong and all of the unknowns must be accounted for whether they come up or not. Most people hire me by the hour after we have a conversation. I have seen a lot of bad contractors out there and I have seen some great ones. It's all about reputation. 

Jon, why do you think your clients don't ask about insurance? Ignorance, or they don't know what to ask for or how to evaluate it, fear of looking foolish? 

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Jon A.
  • Asheville, NC
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Jon A.
  • Asheville, NC
Replied Jul 12 2019, 20:06

@Paul Winka, that's a really good question and I honestly don't know. It could just be that it simply isn't required. Most of the work I do is pretty straight forward and always done to code. If you aren't moving wiring or rerouting plumbing, a license just isn't needed. I don't think it's about them looking foolish by any means. I treat their homes like they are mine and I think that is hard to find. 

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Michael Norris
  • Specialist
  • Strongsville, OH
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Michael Norris
  • Specialist
  • Strongsville, OH
Replied Jul 15 2019, 09:03

@Paul Winka

To answer your questions I have to be very generic...none of what I post is intended to be legal advice.

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?


Price in this situation will be wildly different from state to state and for many other variables. My example of $2000 is an estimate for NE Ohio and could vary greatly based on many variables. A general handyman type person who does no roofing may pay one price vs the same person who does 4 or 5 roofs a year may pay significantly more. Someone who does work on new construction prior to occupancy will pay more than someone who only works on rehab projects. There are dozens if not hundreds of variables.

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?

The difference here is how the insurance companies define coverage. A tenant or guest of a tenant falling should generally be covered by your Landlord policy Liability. A day laborer, if viewed as your employee, would not be a covered party for their injuries because that is what work comp is for. There could be an example out there where a company paid out for a day laborers injuries under the landlord liability but... I wouldn't bet the farm on you getting that same experience.

Your personal homeowner policy is no different. If a guest falls down your stairs you have Med Pay and Liability coverage to pay their injuries. If you or your live in family member falls down the stairs neither Med Pay or Liability would cover their injuries because the definitions in the policy say so.

If you hire a day laborer to do work at your personal home and they get hurt - they can file a work comp claim who may then come after you. Or the injured day laborer could file a medical insurance claim on their own health insurance policy and their health insurance carrier may try to subrogate against work comp who may then come after you.

This is where you need to talk to an attorney and insurance agents in your state familiar with REI related issues and decide what level of risk you are willing to self insure and what you are willing to pay to cover.

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Renee Yarbrough
  • Flipper/Rehabber
  • Chattanooga, TN
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Renee Yarbrough
  • Flipper/Rehabber
  • Chattanooga, TN
Replied Jul 18 2019, 08:15

Thanks for this great info, @Jason Bott! I'm saving it to Evernote as a reference guide.

And many thanks to @Paul Winka for starting this post and continuing it with follow-up questions. So much learning going on in this small space!