Homeowner Guide
Contractor Insurance Requirements: What You Should Verify
Insurance protects both you and the contractor. Here’s what coverage to require and how to verify it’s real and current.
Quick Answer
Require general liability ($1M+) and workers’ compensation insurance. Get certificates of insurance, verify dates are current, and call the insurer to confirm coverage. Never hire a contractor without proper insurance.
Types of Contractor Insurance
| Insurance Type | What It Covers | Minimum Amount |
|---|---|---|
| General Liability | Property damage, injuries to non-employees | $1 million |
| Workers’ Compensation | Worker injuries, medical bills, lost wages | State-mandated |
| Commercial Auto | Accidents involving work vehicles | $500,000 |
| Professional Liability | Design errors, professional mistakes | $1 million (designers) |
| Umbrella Policy | Extra coverage beyond other policies | $1-5 million |
General Liability Insurance
This is the most important coverage and should be non-negotiable:
- What it covers: Damage to your property, injuries to third parties, completed operations
- Minimum amount: $1 million per occurrence, $2 million aggregate
- Why you need it: If a contractor’s work causes damage or injury, this covers the claim
Workers’ Compensation
Required in most states for contractors with employees:
- What it covers: Medical bills, lost wages, rehabilitation for injured workers
- Why you need it: Without it, YOU could be liable if a worker is injured on your property
- Exemptions: Some states exempt sole proprietors with no employees
Critical Protection
If an uninsured worker falls off a ladder on your property, you could face a lawsuit for medical bills, lost wages, and pain and suffering. This can easily exceed $100,000. Workers’ comp protects you from this liability.
How to Verify Insurance
- Request a Certificate of Insurance (COI) – standard document any insured contractor can provide
- Check the policy dates – coverage must be current, not expired
- Verify the named insured – should match the contractor’s business name
- Confirm coverage amounts – meet minimums for your project size
- Call the insurance company – certificates can be forged; verify by phone
Additional Insured Status
For larger projects ($25K+), ask to be added as an “additional insured” on the contractor’s policy. This gives you direct protection under their coverage and ensures you’re notified if the policy is cancelled.
What to Look for on Certificates
- Named insured: Contractor’s legal business name
- Policy numbers: For each type of coverage
- Coverage limits: Per occurrence and aggregate amounts
- Effective dates: Policy start and end dates
- Certificate holder: Can list you for notification of changes
Red Flags
- Can’t or won’t provide insurance certificates
- Expired policy dates on certificates
- Coverage amounts below industry standards
- Business name doesn’t match certificate
- Insurance company won’t verify coverage by phone
- Offers to “add you to the policy later”
When Insurance Matters Most
While all projects should have insured contractors, it’s especially critical for:
- Structural work (foundations, load-bearing walls)
- Roofing and work at heights
- Electrical and plumbing
- Projects over $10,000
- Work involving multiple workers
- Projects near property boundaries
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