When it comes to building a home (or doing any type of significant remodeling work), taking risks should be the last thing on your mind. One of the biggest risks you could take in this case would be hiring a contractor that doesn’t have the proper type of insurance. Of course, it’s generally much cheaper to go with an uninsured contractor, but is the risk really worth the reward?
Having construction work done by an uninsured contractor comes with a massive amount of liability. Why put yourself (and your property) at unnecessary risk? If you hire a contractor with no insurance and somebody gets injured on your property (or a piece of equipment gets damaged), all of the financial (as well as legal) responsibility is going to be placed entirely on you. If you still aren’t convinced, below are five of the top reasons why you need to hire a properly insured contractor.
1. Damage and Injury Liability
This point really can’t be hammered home enough. If your contractor isn’t insured, any injuries or damages that occur on your property are going to be your responsibility. Injuries happen quite frequently on construction job sites. Even the most competent construction crew can make mistakes that lead to injuries (especially if your building project is large and/or complex).
The best way to avoid this massive headache? Skip the uninsured contractor and only choose a contracting company that has all of the appropriate insurance coverage. The peace of mind is absolutely worth it.
2. Good Contractors Have Insurance
Any contractor worth their salt is going to be insured. This is fact. Likewise, most contractors who don’t have insurance typically have shoddy reputations (and even shoddier work histories). Before you hire any contractor, for any type of building project, it’s an absolute necessity to inquire with them regarding their insurance coverage.
You can view basic offerings for contractors insurance online for an idea of exactly what type of coverages are standard in the industry (and how much coverage your future contractor should have).
3. Quality Work is Pretty Much Guaranteed
In order for a contractor to become formally licensed, it’s required that they have contractors insurance. If a contracting company doesn’t have an insurance policy, they cannot be an officially licensed contractor. This is one of the main reasons why a higher level of quality is pretty much guaranteed when going with an insured (and licensed) contractor; their license depends on their quality of work. If a project isn’t built up to the standards of the contractor’s licensing committee, they could potentially lose their license.
4. Lower Long-Term Expenses
Let’s say you hired an uninsured contractor (who most likely had no official license) to build a roof for your house. They finished the job (although it was behind schedule), and your roof is done. Fast forward two years and you need to hire another contractor to make some vital repairs because the first contractor (you know, the one who wasn’t insured) didn’t build it properly (shocker). Guess what? Now you’re going to be paying even more than you would have if you just hired an insured/licensed contractor from the start.
There’s no secret here. Licensed and insured contractors typically provide higher quality services. Their licenses depend on it. Contractors who don’t have a license (and no insurance for that matter) typically don’t offer the same level of service as their licensed counterparts. Save money in the long run by hiring a licensed, insured contractor.
5. Protection From Liability
This was already mentioned in the opening paragraph, but could you imagine hiring an uninsured contractor, and then dealing with the aftermath of an injury that occurred on your property? Would you be able to afford the inevitable lawsuit? Remember, you hired a contractor that doesn’t have insurance. The legal and financial liability of anything that occurs (on your property) is solely your responsibility.
Most insurance companies do not cover incidents like these. So, if you were thinking that your own insurance policy would have you covered, think again. Not only does hiring an insured contractor remove any liability from you, but it also has the potential to even increase the monetary value of your building/home.
If you hired an uninsured contractor and decided to put the home/building on the market, you would potentially need to disclose that work was done by an uninsured company. If the construction wasn’t up to code, that could end up costing you thousands during the selling process. This is why it’s highly recommended to only use contractors that have the proper insurance coverages.