You've likely heard horror stories about working with a contractor who doesn't have insurance. Maybe a friend of yours hired someone to do some work around their home, only to find out that the contractor didn't have any liability insurance and ended up damaging their property. Or maybe you've seen news reports about people being injured by uninsured contractors. 

As a business owner, you likely understand the importance of insurance. But what happens when you hire a contractor who doesn't have any? What are the risks involved? 

Insurance protects businesses from potential losses that could occur as a result of accidents, property damage, or other unexpected events. Without it, businesses would be left to foot the bill for these losses themselves. This is why it's crucial to ensure that any contractors you hire are correctly insured.

What Insurance Should a Hired Contractor Have?

To be adequately protected, contractors have several different types of insurance. 

• General Liability Insurance- This type of insurance covers property damage and bodily injury that may occur due to the contractor's work. For example, if a contractor accidentally damages your home while working, general liability insurance would cover the cost of repairs. 

• Workers' Compensation Insurance- If a contractor is injured while working on your property, workers' compensation insurance would cover their medical bills and lost wages. This type of insurance is required in most states, so confirm that your contractor has it before hiring them. 

• Professional Liability Insurance- Also known as errors and omissions insurance, this type of coverage protects contractors from being held liable for mistakes made during their work. For example, if a contractor incorrectly installs your new roof and leaks, professional liability insurance would cover the cost of repairs. 

• Business Owner's Policy- A business owner's policy (BOP) is a type of insurance that bundles together various types of coverage, including general liability, property damage, and business interruption. This can be a good option for contractors who want comprehensive protection. 

• Business Auto Insurance- If a contractor uses a vehicle for business purposes, they must have business auto insurance. This type of insurance covers damages caused by the vehicle and any injuries that occur as a result of a car accident. 

• Bonding- This is not insurance but another type of protection that contractors can have. A bond is a financial guarantee that a contractor will complete their work as agreed. If the contractor does not complete the job or causes damage, the customer can make a claim against the bond to recoup their losses.

Not all contractors will have all of these types of insurance, but they should have at least general liability and workers' compensation. 

What Are the Risks of Hiring a Contractor Without Insurance?

Here are a few different risks to consider when hiring an uninsured contractor.

1. You could be held liable for damages- If an uninsured contractor damages your property, you could be held responsible for the repairs. This is especially true if the damage was caused by negligence on the part of the contractor.
2. You could be sued- If an uninsured contractor is injured while working on your property, they could sue you for their medical bills and lost wages. Even if you're not found to be at fault, the cost of defending yourself in court can be significant.
3. It could damage your property- If an uninsured contractor makes a mistake while working on your home or business, it could end up costing you a lot of money to fix.
4. It's against the law- In some states, it's actually against the law to hire an uninsured contractor.

As you can see, there are a number of risks associated with hiring an uninsured contractor. If you're considering hiring one, be sure to check that they have the proper insurance in place first. It could save you a lot of money and headaches down the road. 

Always ask to see a contractor's insurance information before hiring them. You should also make sure to get a certificate of insurance from the contractor. This document will list the types and amounts of coverage that the contractor has.

The Benefits of Working With a Contractor Who Has Insurance

Working with a contractor with insurance has a few different benefits.

• You are protected in case of an accident- If an accident happens, you will not be held liable for any resulting damages. The insurance company will cover the cost of repairs, medical bills, and legal fees.
• The job is more likely to be completed- Contractors who have insurance are more likely to be able to finish the job. This is because they have the financial backing of an insurance company in case something goes wrong. 
• You may save money- While hiring an insured contractor may cost a bit more, it could save you money in the long run if something goes wrong.
  

How To Find a Contractor With Insurance

One way to find a contractor with insurance is to ask the contractor for proof of insurance. The contractor should be able to provide you with a certificate of insurance from their insurance company. 

Another way is to check with the contractor's local Chamber of Commerce or Better Business Bureau. These organizations can tell you if the contractor has any complaints against them. They can also tell you if the contractor is in good standing with the organization. 

You can also ask for recommendations from friends or family. If someone you know has had a good experience with a contractor, they may be able to recommend someone to you. 

You can also ask for recommendations from friends or family. If someone you know has had a good experience with a contractor, they may be able to recommend someone to you.

How To Protect Yourself if Something Goes Wrong With the Project

In case something goes wrong with the project, there are two things you can do to protect yourself. First, get everything in writing before work begins. This should include a detailed description of the work to be done, as well as the cost and timeline for the project. Getting everything in writing will help to avoid misunderstandings later on.



Second, only pay the contractor after the work is completed and you are satisfied with the results. Do not pay upfront or in installments. This will help to ensure that the contractor has an incentive to do a good job.

Is It Worth the Risk?

As a business owner, you're always looking for ways to save money. However, when hiring a contractor, it's important to consider the risks. Hiring an uninsured contractor could cost you more in the long run if something goes wrong. 

It's always best to err on the side of caution and hire a contractor with insurance from a reputable insurance company. You do not want to be left with an unfinished project and an enormous bill. Weigh the pros and cons carefully before deciding. Your safety and wallet will thank you in the long run.