Will My Contractor’s Insurance Pay Me When He Screws Up?
You might not want to think about it, but sometimes construction does not go as planned. So, when you hire a contractor, it’s very important that you obtain the contractor’s certificate of insurance. Not only will this let you know whether or not the contractor is actually insured but it will help you understand the scope of the insurance he or she may have. In this article, we will discuss what is generally covered and what is not by a contractor’s insurance policy if the contractor makes a mistake, and will you get paid if the contractor screws up.
Standard contractor general liability policies typically cover claims for damage to other property. Other property is property separate and apart from the contractor’s actual defective work. For example, if you hire a plumber and the plumber installs a pipe that leaks (maybe the pipe is defective or the manner in which the plumber installed it was not according to code). And maybe the leak damages the wall or floor and now that has to be replaced. It is the damage related to the other property (not the pipe and not the plumber’s work), the floor and the walls in this case; that would typically be covered by a standard commercial general liability policy. Cost to replace the defective pipe or to repair the plumber’s defective work would not normally be covered by the contractor’s liability policy because that doesn’t constitute other work. That constitutes the work itself, and standard commercial general liability policies of a contractor do not cover you for those losses.
To protect yourself from a contractor’s defective work itself, consider getting a payment and performance bond from the contractor. With that added to the contractor’s general liability insurance, you will likely have coverage for both the damage to the other property and repair of the defective work. It is important to understand as an owner that a contractor having contractor insurance does not mean you are covered for everything that could possibly go wrong. Know that there are limitations in what is covered by a contractor’s insurance policy. Speak with a board-certified construction attorney or an insurance agent if you have questions.