Owner’s Risks

Homeowners and building owners who engage contractors for repairs, renovations, additions, and new building construction must also protect themselves against the risks. Owners hiring contractors need their properly trained insurance advisers to inspect the certificates of insurance for adequacy and validity, and clear risk responsibility should be contractually in place (that means in writing folks) between the owner and the contractor.

Competent risk management is an important factor in selecting which contractor you choose to engage.  The owner is very much at risk, and if the risk management fails, it is the owner who can suffer major financial losses.

Owners can get support in evaluating their risk management from Don Bury, so just give a call or email to discuss your project.

Wise owners will obtain from the general contractor, certificates of insurance for general liability and workers compensation and auto liability, along with additional insured endorsements.  It is not unwise to obtain the same from significantly involved subcontractors on the job.   If you choose not to have subcontractors provide you additional insured status on their policies, it would be a good idea to have the general contractor show you he has obtained it from them.

As the building owner you want to verify every worker is covered for workers compensation.  Start by making sure you are dealing with a properly licensed contractor, then make sure every worker is covered for workers compensation.  If the contractor has no employees, and tells you he or she is exempt, then ask for a certificate of exemption.

Never dream of relying on your homeowners policy to provide workers compensation coverage for projects requiring licensed contractors.  When you hire someone for a longer term project, such as a home remodel, pool construction, or any job not “incidental to the ownership, maintenance, or use of the dwelling” you must ensure that such persons are properly licensed and insured. If they are not, you could become their employer and be responsible for the equivalent of worker’s compensation benefits in the event anyone is injured.  That could really ruin your day.

Another matter to address is to make sure appropriate property insurance is in place.  Have your insurance agent or broker help you make sure the coverage is in place for materials intended for installation, as well as for partially completed work.

The following is from the California Contractors State License Board

Verify the contractor’s workers’ compensation and commercial general liability insurance coverage

Ask to see a copy of the Certificate of Insurance, or ask for the name of the contractor’s insurance carrier and agency to verify that the contractor has insurance.

In California, if a contractor has employees, he/she is required to carry workers’ compensation insurance. The importance of this cannot be overstated. If a worker is injured working on your property and the contractor doesn’t have insurance, you could be financially liable to pay for injuries and rehabilitation. Your homeowner’s insurance may or may not cover those costs. You should check with your insurance carrier to make sure the workers’ compensation insurance coverage being provided by the contractor is adequate. Learn more from the California Department of Insurance.

Commercial general liability insurance is not required; however, it covers damage to your property. If the contractor does not carry general liability insurance, he/she should be able to explain how damage or losses will be; otherwise you or your insurance company could end up paying for damages.

A licensed contractor must provide you with information regarding both types of insurance in your written contract.

ALERT All C-39 roofing contractors (whether or not they have employees) must carry workers’ compensation insurance or have a valid Certification of Self-Insurance on file with CSLB. This information is indicated when you review the status of a contractor’s license.