If this Fall is the season that you’ve decided to go ahead with that kitchen or bath remodel, or to put on a new roof to greet the winter of 2014, you will want to make certain that the contractor you select not only does quality work but will not spring an unexpected claim on you and your homeowners insurance policy.
Anytime you invite an outside vendor on to your property you are exposed to a potential personal liability claim. The most common risk involving remodelers and roofers is a contractor’s employee becoming injured and the contractor not having workman’s compensation coverage. That injured worker can look to the personal liability coverage in your homeowners policy to cover his or her expenses.
If a contractor doesn’t have adequate insurance and injures or damages a person or property (debris blowing off the roof and damaging the neighbor’s car) that injured person or property owner can look to you to make them whole if the contractor has no insurance.
Those scenarios sound scary but in Minnesota if you follow two simple tips you can pretty much eliminate the risk of under-insured or uninsured contractors.
Use a State Licensed Contractor
Just like shade tree mechanics there are a number of “roofing and remodeling contractors” who may have excellent skills but are not qualified to run a business professionally and responsibly.
Minnesota has one of the most stringent licensing laws for roofers and residential remodelers in the country. The Minnesota Department of Labor and Industry is the agency that administers the licensing program and that program ensures in part that the contractor:
- Undergoes a criminal background check
- Passes a written examination for residential remodeling or residential roofing and undergoes ongoing education.
- Provides proof of liability insurance of at least $300,000 per occurrence.
- Provides a Minnesota worker’s compensation insurance certificate.
- Provides Articles of Incorporation or other business formation legal documents.
Tip Number 1
Resist the temptation to use your neighbor’s cousin to do the project because he’ll do it for a great price and he needs the work. Only use a licensed contractor! The DLI has an online registry of licensed contractors available to the public.
Tip Number 2 (and this is important)
Once you have narrowed the field of contractors to a short list, ask for a copy of their certificate of insurance. Certificates are obviously valid the day they are issued but the policy may lapse if premiums are not paid. One of the quickest ways for a marginal contractor to reduce his or her operating cost is to drop worker’s compensation coverage. Licenses are issued for a two year period so that gives the contractor potentially 24 months to go without paying premiums before having to “buy” a new policy.
Call the agency that issued the certificate and make sure the coverage is still in force!
So protecting your homeowners policy is as simple as only using state licensed contractors and verifying that their insurance coverage is valid. There are obviously many other consideration in your selection process but these two steps should be at the top of your list.
