It is important that your contractor is insured, for your own protection. It helps to ensure that you are working with a professional who has a good reputation.
There are two types of a contractor’s insurance, liability insurance and worker’s compensation. Liability insurance will cover certain situations such as damage that your contractor may have caused to your property. Although liability insurance does not usually pay for repairing or replacing work that they may have done that is substandard.
The second type of insurance is worker’s compensation that provides payment to workers who may be injured, lost wages or medical services, no matter who caused the injury. Workers compensation coverage will further provide benefits to the family of the contractor in the event of a death that was related to the contractor’s work.
This is why it is vital that you find out if your contractor is insured before they begin working on the project. The simplest way to do this is to ask the contractor that you are considering hiring to show you certificates of insurance. Once you have these certificates, make sure that you check that the policies are current.
It is also important that your contractor have a bond, this will protect you if the contractor you have hired fails to complete the job that you hired them for, or if they fail to pay for permits, meet various financial obligations (this would include paying for supplies, covering damage that workers may have caused to your property, or paying subcontractors).
In order for a company to be bonded, they would have had to pay a premium to a surety company. You can check this by asking the contractor you’re considering for their bond number and certification, to ensure that they are properly bonded. If you find the bond isn’t complete or you feel that it might be subpar, you could contact their surety company directly, to check. Bonding requirements vary, depending on the state and municipality where you stay.
While you’re checking whether your desired contractor is insured and bonded, be sure to also check if your contractor’s specific trade requires a licence. Various states require particular licences for specific trades, such as plumbers, electricians, or HVAC. It is very important to check this as in some states, if a contractor is not licenced according to their trade, they may be unable to get insurance or bonding. This is also important to check as if a building inspector checks the work and finds that it is being done by contractors who are not properly licenced, they have the power to halt the work.