Lets continue with rule #2, today we will talk about the insurance that contractors should have in order to protect them and their customer.
Contractors should have a minimum of a General Liability policy for the trade(s) they perform. So if they are a plumbing contractor, they should have plumbing work General Liability Insurance.
Further, if a contractor employs more than three employees they are required to have Workers Compensation Insurance. To avoid this, contractors will use contract labor instead of employees to get around this three-employee rule. Why would they do this, because insurance adds to the cost of doing business, and to stay competitive with uninsured contractors, they choose to be vulnerable to liability for accidents as well. One more thing, proper payroll and taxation adds to the overhead or company burden, most fly-by-night contractors would rather write a check for the labor than to add someone to a payroll system.
How does this protect the contractor and the property owner?
An example would be if the plumber installed a new bathroom, the new shower started leaking and if ruined the ceiling of the floor below, and the water damage ruined some furnishings. The property owner, called the plumber, the plumber called their insurance and they will make sure this situation is resolved correctly.
How do ensure you have this protection?
You, the customer are the one who has control, you should respect yourself and your property enough to require the contractor provides a “Certificate of Insurance” or commonly referred to as a “COI”. Properly filled out from their insurance agent, a COI will show their coverage information, effective dates, type of work they are covered for, and who is covered or the “additionally insured”.
Why would you or wouldn’t you want insured contractors performing projects on your property?
Email me to let me know what level of risk you are willing to accept. Contact@cva.email
Thank you for reading, and in our next blog we will discuss the importance of customer references and how to get them.