Insurance Coverage for Contractors
Posted on 12/11/2015 at 09:28 AM by Dawn Gee
We had an iPad giveaway at our home show recently. When the winner came to our office to get his prize, he talked with us about roofs. He asked us if pretty much everybody in our industry has similar pricing. This is a good topic to investigate a bit deeper.
Pretty much everyone uses the same products, but it doesn’t mean that there aren’t some businesses out there that won’t stoop to taking shortcuts. Maybe they won’t put felt paper over one of the rooms, for example, and they will instead decide to shingle right over the area. Shortcuts are one way to have lower prices than the competition.
Aside from taking shortcuts, there’s another area that may lead to a difference in contractors’ pricing: insurance.
There are two types of insurance that any contractor visiting your home should have.The first is general liability insurance. What do you think your home is worth? Let’s say it’s currently worth $120,000. Is that the value that the contractor has for their general liability insurance? If they only have enough to cover the home’s value, it doesn’t cover any of the belongings that are actually in the house.
Your belongings such as clothes, furniture, and heirlooms should all be factored in along with the house itself. Remember, general liability insurance isn’t just about the house, but also everything that’s inside it, too. At Bakeris Roofing, we have $3 Million worth of general liability insurance. That covers both the physical property and the belongings inside. If something were ever to happen, we would have you more than covered.
In the state of Iowa, the minimum value for general liability insurance is $50,000. This amount simply isn’t going to be enough is something goes wrong. Maybe the roof couldn’t be covered in time and a storm would leak into your home, causing significant structural damage and damage to your belongings.
The second type of insurance that you should pay attention to is workers’ compensation. Also called ‘workman’s comp’, the average contractor has $500,000 of worker’s compensation. At Bakeris Roofing we have $1.5 Million per worker. This is very expensive insurance, so why do we have such a high amount of coverage? Simple. We want to protect our workers and we also want to protect the homeowner.
(There are circumstances where employees in sole proprietorships/partnerships are working by themselves. The law states that owners of a company do not have to have workers’ compensation insurance for themselves.)
While it is possible for a company to be overinsured, as a homeowner you never want to hire a company that is underinsured. If something does go wrong and the company doesn’t have the proper insurance (or doesn’t have enough coverage), guess who will have to deal with the problem? You will. You’ll have to go to your own homeowner’s insurance. If both you and the contractor are underinsured, things will probably get messy.
In that case, it might be necessary to get attorneys involved and the cost will likely come out of the homeowner’s pocket. What has effectively happened is the homeowner acts as the general contractor. Now, they have to get involved, which never would have been necessary if they would have simply done some due diligence.
When we meet with you in your home, we are right upfront with our insurance coverage. You see our certificate of insurance for both workers’ compensation and general liability. The phone number for our insurance company is also included so you can call them to verify the certificate’s validity.
Even though you may see a company’s insurance certificate, we always suggest that you call the insurance company just to be completely sure. There are many unethical companies out there that will fake the document or just obtain insurance to receive the certificate and then drop it immediately afterward. If the company gives you a certificate and something doesn’t feel right, take that extra step to verify that it is valid.
Due diligence also means talking to experienced authorities on the subject. Just like you talk to Bakeris Roofing about your roof, you should talk to attorneys for advice about proper coverage. While they might ask you to pay for their services, most attorney will provide a free consultation.
We recommend that the company has at least $1 Million in general liability insurance. Also pay close attention to the insurance certificate for workers’ compensation. Three-fourths down the insurance certificate is the slot for workers’ compensation. Next to it is the dollar amount that they are covered. If this area is blank or has zeros, it means that they don’t have workers’ compensation. If these numbers are extremely high, you should probably be asking yourself if the certificate has been doctored.
At Bakeris Roofing, we can arrange for the insurance company to send the documentation directly to you. If not, just make the call to the insurance company to verify the coverage. You owe it to yourself, your family, and your home to do the research to make sure you are properly taken care of. Like we’ve said before, we have you covered at Bakeris Roofing.