When it comes to home renovations and insurance, most people fail to follow a few simple steps that could save them BIG!
You’ve saved money, made plans, have estimates in hand, and are ready to break ground on your home renovation. You’ve compared pricing, scopes of work, and customer reviews and have narrowed it down to the top contractor. It’s time to sign the dotted line and swing the hammer. But wait! Have you verified the contractor’s insurance?
In this article we will explore what every homeowner needs to know about insurance before and after the next home renovation.
- Verify Insurance Coverage BEFORE The Renovation
- Request A Certificate Of Insurance
- What Insurance Coverage Should Your Contractor Have
- Update Your Home Insurance Information
Verify Your Contractor’s Insurance BEFORE The Renovation
Before beginning a reno, it’s crucial to verify that your contractor has insurance and proper coverage. You may have asked, “Are you insured” and received a positive response but that is not enough. What if they are being dishonest? Or what if they don’t have the right kind of insurance or enough coverage? You need to see proof!
Request a Certificate of Insurance
Before you agree to work with the contractor, request a certificate of insurance from them. A Certificate of Insurance is a document that serves as proof of insurance. It shows that your contractor does indeed have insurance, and will provide other helpful information. Once you have the certificate in hand, be sure to look closely at the following:
- Date Field: In the top right corner there should be a date, usually within a day or two of today’s date. This shows that the certificate is current.
- Contractor’s Name: Verify that your contractor’s business name is listed on the certificate
- Insurance Carrier Name & NAIC number: Verify the insurance carrier name is paired with an NAIC number, which shows the insurance company is registered with the National Association of Insurance Commissioners
- Types of Coverage: The certificate will list a few types of coverage that are either checked (included) or are not checked (not included). The included coverage should also show policy numbers & effective dates. (More on this Below)
- Your Name & Address: Your name and address should be printed in the bottom left corner.
- Signed by Agent: An agent from the insurance carrier should have signed at the bottom of the certificate.
If any of the above are missing or incomplete, speak with your contractor or their insurance provider to discuss the gaps or request a corrected certificate.
What Types Of Coverage Should Your Contractor Have?
The two main types of insurance coverage your contractor should have are general liability and worker’s compensation.
General liability covers injury to others and property damage. For instance, if your neighbor trips and falls over their equipment, the contractor’s general liability will cover their injuries. Or, if an employee accidentally breaks a window during work, it will be covered. Most policies come standard with a $1 million limit, which is sufficient for most renovation projects. However, if your home or belongings exceed a $1 million dollar, you might want to request more.
Worker’s Compensation is also very important, as it covers any employees who may be injured while performing their scope of work. If your contractor does not carry Worker’s Comp, an injured worker may come after you with a lawsuit.
Make sure both General Liability and Worker’s Compensation boxes are checked off on the Certificate of Insurance. Their policy numbers should also be present, as well as effective dates and expiration dates. It is very important that you verify the effective and expiration dates span your entire renovation timeline.
Other coverage may include Business Auto Insurance and Umbrella Insurance but those typically aren’t dealbreakers when it comes to hiring a contractor, as long as they carry the other two.
Other Important Requirements
In addition to being properly insured, you should verify that your contractor is properly licensed and pulls all the necessary permits for your project.
Update Your Home Insurance Information After A Renovation
After your home renovation is complete, you should contact your homeowner’s insurance carrier to update your home’s information.
If you make any large changes, like adding square footage, your agent may recommend increasing your coverage to ensure your home is insured to its replacement cost.