As a business owner you’re responsible for the safety of your employees and your customers. That’s one reason it’s so important to make sure the contractors you hire to work on your building or property are adequately insured.
Otherwise your business could bear the brunt of the repercussions if the actions of an uninsured contractor causes injuries, damages your property, or worse. Even more concerning is that some property insurance policies specifically exclude coverage stemming from claims against uninsured contractors.
What are the Specific Risks Businesses Face?
It doesn’t take much surfing the Internet to find countless horror stories about contractors doing business and homeowners alike wrong, and then never being heard from again.
When contractors leave jobs unfinished, do poor work and attempt to cover it up, or leave dangerous tools and equipment lying around, your business is the one at risk – especially if said contractor doesn’t have proper insurance coverage.
There are essentially three types of insurance coverage you need to check for when checking out contractors for repairs to your business.
1) Workers’ compensation insurance
2) Public liability insurance
3) Property damage insurance
Contractors that do not have these types of insurance coverage are placing your business at risk if injuries occur to their employees and subcontractors as well as your employees, customers, and guests. They are also placing you on the hook for damages that occur to your property and neighboring properties as a result of their actions.
How Can You Mitigate those Risks?
While you cannot possibly eliminate all risks as a business owner, there are some risks you can work hard to minimize. This is one of those. It doesn’t take a great deal of effort to ensure that your contractor has the proper insurance coverage to meet potential liability and workers’ compensation obligations that may arise over the course of your project.
- First, work only with licensed contractors. The costs may be higher but the risks are considerably lower.
- Trust, but verify. Ask for the contractor’s insurance agent to fax a report about the specific insurance coverage the contractor has, as it applies to your project, as well as the end date for coverage so that you’re certain insurance will not expire before you project is complete.
- Beef up your own business insurance coverage as well. Even if the contractor has insurance coverage, it may not be adequate for large claims. Make sure your business insurance is high enough in value, and the right kind of coverage to make up the difference.
Making wise decisions like these and taking action before hiring a contractor will minimize your risks as long as you hire contractors with adequate insurance coverage. Failing to do so could land your business in a position of substantial risk.
