If you’re planning a renovation, such as an updated bathroom or finished basement, you’re going to require a contractor. Oftentimes, an experienced friend or family member will respond that he is a handyman, and can do the work for a fraction of what a company would charge. The possibility of saving money, and still getting high-quality work is awfully tempting, but is saving money worth the risk?
No â€“ and, this determination has nothing to do with the quality of his craftsmanship. Your buddy (or, in many cases â€˜your buddy’s buddy’) could be the world’s greatest renovation expert. He could have single-handedly renovated his own home or won an award for cabinetry design, but unless he’s licensed and insured (and, can prove it), it’s not a good idea to hire him.
UNLICENSED AND UNINSURED = HUGE FINANCIAL RISK
Do not hire someone who isn’t licensed and insured to work on your renovation. Oftentimes, if a contractor (or, handyman) isn’t licensed, he’s also uninsured. Therefore, if he’s injured on your property he’s going to sue you.
It happens all the time. A Chicago based handyman once sued a homeowner after he was injured on her roof. A Belleville, IL homeowner was sued by his former handyman after a garage door turned faulty and injured him.
Families aren’t exempt from personal injury lawsuits. Insurance policies do not cover extended family members, so your handyman brother would have a case against you if he was injured on your property.
At this point, you may be thinking, â€œBut, isn’t that what homeowner’s insurance is for?â€ In most cases, your insurance company is going to increase or cancel your policy after a lawsuit. Your insurance could skyrocket â€“ making it unaffordable. Or, worse still, your insurance company could drop you altogether, which isn’t going to bode well with your mortgage company. To protect yourself: always make sure your contractor is licensed and insured.
GENERAL LIABILITY AND CONTRACTOR’S BOND (AKA SURETY BOND)
There are a few types of insurance a contractor carries, but the following are the most common.
General Liability â€“ This insurance covers loss and injury. If your contractor is injured, he can make the claim against his own general liability insurance. At the very least, you want your contractor to be covered with this insurance.
If your uninsured contractor wishes to become insured to complete your renovation, he’ll need to get a general liability insurance quote, and then follow through with signing an insurance agreement. Do not allow anyone to work on your property unless you’ve verified their insurance.
Contractor’s Bond (Surety Bond) â€“ This coverage ensures your project is completed. If the contract’s obligations are not met, you are covered by this insurance. Remember: a handshake is not a contract. If your handyman is working with both a written contract and a contractor’s bond, you can rest assured the job will be completed on time. Otherwise, you’ll be properly compensated.
THE MORE INSURANCE THE BETTER
The more insurance your contractor comes with, the better off you’ll be. Oftentimes, actual businesses are going to carry more insurance than individual (freelance) contractors. It’s up to you if you’re satisfied with simple general liability, or if you want your contractor covered by something more comprehensive, such as worker’s compensation.
Here are some examples of insurances your contractor may come with:
Â·Â Builder’s coverage
Â·Â Equipment coverage
Â·Â Pollution insurance
Â·Â Errors and omissions
Â·Â Home inspector
Â·Â Engineering and architecture
Don’t ignore the risks and hire an unlicensed and uninsured handyman. Licensing ensures he’s capable, and insurance guarantees you’re not liable for his injuries or mistakes. Don’t let your renovation cost you more than its worth.