Sunday, June 29, 2008

Why You Should Make Sure The Contractor You Hire Has Insurance

Californians spend more than $39 billion on residential construction each year. Many homeowners have discovered, especially in light of the current real estate market with declining home values, that improving their current home with an updated kitchen or bathroom, an additional room, new windows or a new roof can be a better investment than trying to sell their home and buying a new one. However, the cost of adding a room or remodeling can be substantial, so consumers need to take some time and care in planning a home improvement project.

One of the important issues in selecting a contractor is to make sure he has various types of insurance coverage. It just makes good sense to demand that your contractor has the necessary types of insurance before you go forward with a home remodeling project.

Make Sure the Contractor Has Workers' Compensation and Liability Insurance Coverage

It is a state law in California that all contractors must have Workers’ Compensation insurance, unless they have no employees and do all the work themselves. Contractor certificates of insurance need to be currently filed with the Contractors State License Board and a record of that can be found at

If a contractor’s employee gets hurt and the contractor IS covered by Workers’ Compensation insurance, then that liability is covered by the insurance carrier, not by the contractor or homeowner. Since such major injury claims can go on for years and cost large amounts of money, it’s vital when hiring a contractor to ensure that he has this coverage.

The cost of Workers’ Comp insurance has risen dramatically over the last decade due to fraud and other factors. The Governor and California state legislature have instituted effective reforms several years ago, but the cost of this insurance is still high. Some contractors try to avoid carrying this type of insurance so they can be more competitive in price. But they also may cut corners on the quality of work to your home, and they will probably carry through with this low level of professionalism in everything they do for you. A true professional will carry insurance--period.

In order for a General Contractor to hire a sub-contractor, the sub-contractor must provide proof of Workers’ Comp insurance. General Contractors are audited each year by their carriers to ensure that no uninsured sub-contractors were hired.

Liability insurance is not required by law, but it’s vital for many reasons. This type of insurance pays for damages that might occur to a property based on errors made by the contractor. Once again carrying this type of insurance is an indication of the professionalism of the contractor.

Liability coverage helps to ensure that the quality of the work done will be good for years to come. If a problem crops up with the work done, even years later, Liability insurance is the method to gain relief.

If your contractor damages your property and doesn't carry general liability insurance, you or your insurance company could end up paying for damages.

Lack of this insurance would prevent a contractor from working on more upscale projects that require certificates of insurance prior to starting any work.

Verify your contractor's insurance coverage before hiring him. It’s just an indication of professionalism and you should make it a requirement for your home remodeling project.

About the Author

Roger Perron is President of Fine Designs by Roger Perron, Inc., General Contractors (, offering Architectural Design, Home Remodeling and Additions of all types, as well as Custom New Home Construction in the Los Angeles area. He can be reached at:

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