Why Your General Contractor Must Have Insurance

When you’re getting construction work done, you need to consider a lot of things. For one, you have to set a budget that you must work to stick to for the entire project. For another, you have come up with a design that will work for you. You will also have to find a good general contractor to help make your project come to life.

Finding a good general contractor can sometimes be tough, but you need to do your best to find one who does not only have the expertise, capability, and experience to oversee your construction, but also the proper contractor insurance coverage.

Why do you need your general contractor to be an insured one? Here are some of the reasons.

To confirm that the contractor is legitimate

Many individuals offer their services as a contractor but don’t actually have the license to do so. If a contractor is insured and provides proof of coverage, then you can be sure that that contractor is legitimate. Securing a license to operate as a contractor requires having insurance coverage. So if your contractor is insured, then he or she is a licensed one.

To not be liable for injuries and damages

The most common insurance policies contractors have are general liability insurance and workers’ compensation insurance. The former pays for any claims made for third-party injuries or property damage, while the latter covers the medical expenses and lost wages of workers who suffer an injury while working on your construction project.

If your general contractor doesn’t have them, then you will in effect be the contractor, and therefore liable for the injuries, property damage, or even deaths that happen on the work site.

To lower costs in the long term

While you may be able to save money from the generally lower rates that unlicensed and uninsured contractors may offer you, you may still end up spending more in the long run. You could be shouldering the cost for construction mistakes that need to be rectified, or pay for an injured worker’s hospitalization and medications if your general contractor has no insurance coverage.

Hard pass on uninsured contractors

Their services may come cheap, but uninsured contractors could cost you more. Aside from being unsure about the quality of work because of the lack of qualifications, an uninsured general contractor can make you a target for a lawsuit that could end up bankrupting you.

So even if someone offers you such services for cheap, steer clear of them if they have no insurance. The risks are just too high, and you wouldn’t want to take them on.

Guest Contributor, Rachel Porter