Insurance and contractors: Who’s liable and why you should check to see what coverage your contractor carries?

Your contractor gets hurt — or he hurts you. Either way, you both better have insurance to avoid a contractor liability nightmare.

What happens if, despite all precautions, there’s an accident involving your contractor that leads to a liability issue? Who’s responsible — and who pays — if:

• Your contractor falls off his ladder while fixing your roof?
• Your builder drops a hammer and it goes through your windshield?
• A subcontractor hired by your contractor is injured on your property

Step 1: Check the Personal Liability Section of Your Homeowners Policy

Before beginning a remodeling project, check your homeowners policy for specifics regarding injuries on your property, notes Chicago-based attorney Steven J. Thayer.

Policies vary widely. Look in the personal liability section of your homeowners policy for details, says Jack Smith, a spokesperson for the trade group Independent Insurance Agents and Brokers of New York.

Typically, major injuries aren’t well-covered — limits are usually fairly low. Don’t trust your homeowners or umbrella policies to protect you if a builder’s employee sustains major injuries.

The bottom line? Instead of worrying over your insurance, make sure your builder has his own.

Step 2: Check Your Contractor’s Insurance

Any builders you hire should have their own general contractor liability insurance — ask to see proof. The insurance should cover:

• Any bodily injury or property damage the firm accidentally causes to you, your family, and your property.
• Workman’s compensation for injuries builders cause to themselves or their employees. Not all states require this for small contractors, so ask your contractor to provide you with a policy certificate.
• Accidents involving the contractor’s own equipment, such as falling off a ladder. (Contractors using your ladder could claim it was your faulty equipment, not their clumsiness, leading to an insurance battle and a lawsuit. Don’t provide your contractor with anything more dangerous than a pencil.)

Builders have to ante up a lot for all this contractor liability insurance — and it will be reflected in their bill. But if uninsured workers hurt themselves on your property, you’ll find a lawyer’s hand in your pocket pretty quickly.

This applies to subcontractors as well: Ask your contractor for a list of all the subcontractors on a job so you can check their insurance status as well.

Remember, Insurance is a safety net for “In case something bad happens” we never use insurance for anything good. It is so important to make sure your contractor is fully covered because that covers you “In case”.