Insurance… What is it good for?
As you’re driving around, I’m sure you’ve seen something to the effect of “Licensed and Insured” on the back of a contractor’s van. You might have even seen “bonded” for good measure. The insurance world for construction can be challenging to navigate. Here’s a quick rundown of what you need to know when hiring someone for your project.
Insurance
There are generally 3 types of insurance that contractors can apply for (and should have): General Liability, Worker’s Compensation, and Automobile. Each is critical to protect your home and assets. When you invite workers to your home, you are opening yourself up to liability if the contractor onsite is un- or under-insured, leaving you with an expensive repair bill or legal action. Here are brief descriptions of the three:
General Liability
This is the catch-all policy for any damage to your property. For instance, if a contractor accidentally throws shingles off the roof and it hits your car or your neighbor’s home, a contractor with insurance will use their insurance policy to cover the damage. If they don’t have this, you’re liable. Georgia Roof + Exteriors has an industry leading 1mm per occurrence policy with a 5mm umbrella, which means you are covered if anything happens.
Worker’s Compensation
Commonly called Workers Comp, this type of policy insures that if someone gets hurt on the job, they and their family are provided for as they recover. These policies generally pay out lost wages due to injuries and help with medical expenses. If the contractor you hire doesn’t have WC insurance, homeowners are viewed by the law as the employer, and are generally liable for injury claims. This can be hundreds of thousands if not millions of dollars. Georgia Roof + Exteriors ensures that all workers on our jobsites are covered.
Auto insurance
Many contractors use their personal auto insurance and assume they are covered. However, most insurance companies will deny claims when trucks and other equipment are used for business purposes. This means that if they bump your car while they are in your driveway, you’re on the hook for damages. We have an industry leading Combined Single Limit 1,000,000 dollar policy, which ensures that any damage we may cause is covered.
CASE STUDY
I recently was out bid by a few hundred dollars on a project that totaled around 20,000. Come to find out, the other contractor had no insurance! As the homeowner- always ask to see a certificate of insurance (COI) for major repair work. Initial cost savings of a few hundred pales in comparison to hundreds of thousands in injury claims. (We still won the job, by the way).
Licensing
In Georgia, a contractor’s license is not required to own a roofing company or perform roofing work. (This creates challenges for property owners, and it’s our humble but accurate opinion that it would be best to have a governing body that speaks to financial viability and quality of contractors, but that’s a story for another day).
However, contractors are still required to have a business license, as this ensures we are compliant with local laws and regulations, and current on taxes.
Permits
Even though a contractor’s license is not required, we are still able and, depending on the municipality, required to pull permits for roofing and siding projects as a specialty trade contractor. Always ask a contractor if they are planning on pulling permits for a project. An unpermitted job can cause headaches for you long after the contractor is paid and gone.
Bonding
Bonding is a lesser known aspect of the insurance and licensing world; generally, a contractor gets a bond for a specific project. The contract value is then guaranteed by a bonding or insurance company that if a contractor goes out of business, the insurance company will write a check for the contract value. We routinely provide bonds on projects that exceed value thresholds to provide security for customers on large projects.
COVERING YOUR BASES
Here’s a quick checklist for you as a discerning property owner:
- Always ask a contractor to see their certificates of insurance. If they are unwilling to provide this, that is a huge red flag! If they are cutting corners on insurance, what corners will they cut on your project? You should specifically see the following minimums:
- GL: 1mm per occurrence
- Worker’s comp: 500,000 per occurrence.
- Auto insurance: Combined single limit of 100,000
- As an additional measure of protection, ask your contractor to add you as an “Additional Insured.” This means that if anything goes sideways, the insurance company already has your information and is aware that you are a payee on any related claims.
- Ask about permits required in your municipality. Every city is different, so if they don’t know if a permit is required off the bat, don’t sweat, but don’t let them start a project without confirming if a permit is needed.
- We recommend you check their business license. This ensures they are compliant on local laws and current on taxes.