02 May Does your Renovator have or need insurance?
Do you have or need insurance?
This is a valid question for any home owner to ask of their perspective renovator or new home builder. Do not be afraid to ask for a copy of their certificate of insurance as part of your signed contract and you should always have a signed contract.
As renovators there are always risks associated with the work being performed and insurance is the typical method of protecting clients, employees, public and companies from these risks. The insurance coverage that is typically carried is Liability Insurance, Workers Compensation Board Insurance and Commercial Auto Insurance. A new home builder will often carry Builders Risk Insurance, because they have complete control of the new home and ensure the entire building.
Liability Insurance basically provides protection for the home owner for bodily injury or damage to the property being renovated, caused by the negligence of the contractor. Water leaks from plumbing, electrical fires, water damage if a building is not secure during a rain or snow event are examples of damage that is typically covered with liability insurance. Having $2-5 million in coverage is common. An insurance provider can provide more details of what a policy should and will cover.
Workers Compensation Board (WCB) insurance is paid by any company that has a payroll and does source deduction. Basically, all companies with employees will pay into Workers Compensation to ensure employees/trades people working on your project are covered for any injuries. This is important because when hiring a contractor, if they do not have WCB coverage, then the home owner can be held responsible for any cost associated with an injury on their job and can open themselves to potential law suits if someone is injured. Essentially, if you hire a trades person who does not have coverage then you become the employer of that person and are responsible. This can be a scary situation, but it is easily avoided by hiring a contractor with WCB coverage. Simply request the contractors “Clearance Letter” from WCB, indicating that the contractors account is in good standing. Additionally, the company should have a safety program that is certified and can provide a “Letter of Good Standing – Safety Certification”. This ensures the company is proactive regarding safety and has reduced risk of injury or accident. Requesting this documentation can be a simple addition to any renovation contract.
Commercial Auto Insurance ensures that when your contractor is driving to pickup materials or any task related to your renovation project, if they are involved in a motor vehicle accident the insurance is valid and they are covered. If the contractor is only covered for personal use of the vehicle and has not informed his insurer that they are using the vehicle for work, it could void the insurance. This is more of a credibility issue as any reputable professional renovation company will have commercial auto insurance. It is always best to be properly insured and to be honest with the insurance company to ensure proper coverage.
As a final note, it is critically important to contact your home insurance provider if you are planning a renovation or addition to your home. This will allow the insurer to have the correct coverage for your personal home insurance, based on the renovation being completed and potentially the increased value of your home when finished. Being open and transparent with your insurance company is always important to ensure you remain properly insured.
Dan Monk, P.Eng. / Red Seal Carpenter
Owner – MONK Renovations