Insurance & Basement Finishing – Be Very Afraid
With from the industry being one of the hardest-hit inside the recent recession, many out of work employees have looked to basement finishing and kitchen remodeling to get by. While there is nothing inherently wrong with this, a disturbing trend has emerged.
One question that frequently surfaces is: Should my contractor have their insurance?
Five years ago this could not need to be been asked as often, but more fly-by-night contractors around, homeowners are now being told a lot more than insurance will not be that important.
After all, you have your personal homeowner’s insurance, right? If your basement finishing contractor damages you, your family, your house, etc., won’t your insurance look after it?
The fact is an emphatic, “NO!”
For a much more detailed explanation, simply call your insurance agent and ask for his insight into the topic. But here is the “in-a-nutshell” explanation.
Basement finishing can be a business much like another. The contractor who accepts any project is doing business in most form or some other. Regardless of whether he’s an individual, sole proprietor, or owner of an LLC or Corporation, he or she is in the business of basement finishing.
The moment he, his employees, or his subcontractors step onto your property and start work, your insurance plan completely washes its hands of the responsibility for actions.
So, if the home burns down because the plumber’s torch starts a hearth, if it falls because your contractor removed something that shouldn’t are already removed, or if he backs more than a neighborhood child while dropping off materials, your could be inside a dangerous situation!
Granted, on many occasions, your insurance may purchase initial damages after which go after your basement finishing contractor personally (an activity called subrogation). But imagine if they don’t? How much can it cost, and the way long could it take for that you sue him personally?
Even worse, look at the horrible possibility which a neighbor’s child is hurt or worse as a consequence of something your contractor did. How awful would it be in case your neighbor sued you personally for damages because his attorney realized your insurance-free contractor couldn’t survive worth suing?
Verify that the basement finishing contractor carries commercial general liability AND worker’s compensation insurance (we’ll cover the importance of workers comp in another article). You can even be a “certificate holder” around the insurance policy so you will be notified if he decides to cancel a policy after he’s showed it for your requirements.
It’s easy, but the essential key to safeguard your family and your property.