As a homeowner embarking on a building or renovation project, the seemingly endless list of tasks and considerations can be downright overwhelming. From sourcing the right materials to coordinating contractors, there’s so much that requires your attention. And one crucial element that often gets overlooked? Insurance.
Understand the Basics of Contractor Insurance
When it comes to insuring your project, the first step is to make sure your contractor has their ducks in a row. According to the Contractors State License Board in California, all contractor advertisements must display the contractor’s state license number. You can easily verify the status of their license by checking online or giving them a call.
Now, just because a contractor has a valid license doesn’t mean they’re the perfect fit for your project. The same CSLB resource emphasizes that “Most licensed contractors are competent, honest, hardworking and financially responsible. However, most of the problems CSLB sees could be prevented if homeowners knew their home improvement rights and took responsibility for their project.”
That’s why it’s essential to do your due diligence. Get at least three written bids, and make sure you’re comparing apples to apples. Don’t automatically go with the lowest bid, as that could indicate the contractor made a mistake or is cutting corners. As the saying goes, if it sounds too good to be true, it probably is.
Require Proper Insurance Coverage
When reviewing those bids, one of the most important things to look for is proof of insurance. Travelers Insurance recommends asking the contractor for a certificate of insurance (COI) that shows the name of their insurance company, policy number, and policy limits.
There are two key types of insurance you’ll want to make sure your contractor has:
-
Workers’ Compensation Insurance: This covers any injuries that may happen to the contractor’s employees while working on your project. In some states, like California, this coverage is actually required by law. If a worker gets hurt and the contractor doesn’t have insurance, you could be on the hook for their medical bills and rehabilitation costs.
-
General Liability Insurance: This protects against damage to your property during the project. If the contractor doesn’t have this coverage, they should be able to explain how any losses or damages will be handled – otherwise, you or your own homeowner’s insurance may end up footing the bill.
Don’t be afraid to reach out directly to the contractor’s insurance provider to verify their coverage is still active and adequate. It’s better to do a little extra legwork upfront than to find yourself in a sticky situation later on.
Consider Bonding and Licensing Requirements
In addition to insurance, you’ll also want to make sure your contractor is properly licensed and bonded. According to the CSLB, California licensed contractors are required to have a contractor license bond. These bonds can provide some protection against substandard work that doesn’t meet local building codes.
However, it’s important to understand the limitations of these bonds. They don’t necessarily guarantee the financial or professional integrity of the contractor. You’ll still want to do your own research into their reputation and track record.
When vetting potential contractors, ask to see their pocket license and a valid photo ID. This helps ensure you’re dealing with the same person whose license you’re verifying. And if the contractor has salespeople working for them, those individuals must also be registered with the CSLB as Home Improvement Salespersons.
Get Everything in Writing
Once you’ve found the right contractor and confirmed their insurance and licensing are in order, the next step is to get a comprehensive, well-written contract before any work begins. As Travelers Insurance recommends, this contract should include:
- A detailed description of the work to be performed
- The timeline for completing the project
- The total cost and payment schedule
- Information about the contractor’s insurance coverage
- A cancellation clause in case you need to back out
If the project involves substantial costs, you may even want to have a lawyer review the contract before signing. And remember, any changes to the contract should be acknowledged in writing by all parties involved.
Protect Yourself During the Project
Even with the proper insurance and a watertight contract in place, unexpected challenges can still crop up during the renovation process. Travelers Insurance advises being realistic about potential delays, as factors like weather can impact the project timeline.
It’s also a good idea to keep a detailed job file, containing your contract, plans, invoices, and any correspondence with the contractor. That way, if any issues arise, you’ll have a paper trail to refer back to.
And don’t forget about your own homeowner’s insurance. Make sure you understand how it may or may not cover damages or injuries related to the project. You may need to adjust your coverage or discuss add-ons with your provider.
Putting It All Together
When it comes to insuring your building or renovation project, there’s a lot to keep in mind. But by taking the time to thoroughly vet your contractor, confirm their insurance coverage, and get everything in writing, you can help protect yourself, your property, and your investment.
After all, your home is likely one of your most valuable assets. Doesn’t it deserve the best possible protection? By prioritizing insurance as part of your project planning, you can have peace of mind knowing you’re covered, no matter what challenges may arise.
Ready to get started on your next home improvement project with ABC Home & Renovations? Reach out to our team today, and we’ll be happy to walk you through the process step-by-step.
