Vetting insurance of handmen & other Craiglist contractors.

[Paul Winka]

I know it's a mixed bag hiring off Craigslist. Still, I am trying to hedge my bets regarding certificates of liability insurance for a more skilled but small job. I keep hearing and reading, make sure they have insurance and you're protected and be careful!!! Ok, roger, got it. A good contractor should have solid insurance anyway, so it's sort of like killing two birds with one stone by verifying their insurance.

Trouble is, I don't know how to verify appropriately other than checking the expiration dates and calling the insurance company itself. If the worst happened, I'd hate to find out I am getting sued because one checkbox on the Acord form 25 wasn't checked or if the GC canceled the insurance and I wasn't notified. What if one of the subs gets hurt and not the GC? Or there is a botched job and now it will cost more to repair than before? Do I demand that I be added as additional insured and that a new certificate be issued? These are the types of rhetorical questions I have running through my mind.

So my main question is, what is your SOP for hiring someone new regarding insurance say when I get them on the phone or they email me from my post? Seems like nearly everyone in my area (Missouri / Illinois) uses Acord. What do you look for specifically on that form? Thanks!

[Jason Bott]

Originally posted by @Paul Winka:

I know it's a mixed bag hiring off Craigslist. Still, I am trying to hedge my bets regarding certificates of liability insurance for a more skilled but small job. I keep hearing and reading, make sure they have insurance and you're protected and be careful!!! Ok, roger, got it. A good contractor should have solid insurance anyway, so it's sort of like killing two birds with one stone by verifying their insurance.

Trouble is, I don't know how to verify appropriately other than checking the expiration dates and calling the insurance company itself. If the worst happened, I'd hate to find out I am getting sued because one checkbox on the Acord form 25 wasn't checked or if the GC canceled the insurance and I wasn't notified. What if one of the subs gets hurt and not the GC? Or there is a botched job and now it will cost more to repair than before? Do I demand that I be added as additional insured and that a new certificate be issued? These are the types of rhetorical questions I have running through my mind.

So my main question is, what is your SOP for hiring someone new regarding insurance say when I get them on the phone or they email me from my post? Seems like nearly everyone in my area (Missouri / Illinois) uses Acord. What do you look for specifically on that form? Thanks!

 Paul, I put this piece of content toghter for this exact question.  Hopefully it helps.

Vendor Risk

There are 2 business relationships a REI has that can cost you big $ if you do not have proper procedures to insure THEY have the correct insurance coverages in place. Contractor and Property Manager.

Contractor

Every landlord will need to hire a contractor at some point to get work done on a property. In order to save yourself HUGE out of pocket costs, it is vital that you take control of the 3 major risks you have when a contractor is working on your property.

.

• 1)Contractor damage they don’t want to pay for. Any claim they do not want to accept responsibility for.
• 2) Assuming they have coverage – The coverage you and the contractor think they have, and what they actually have, may be worlds apart.
• 3)Future claims stemming from faulty workmanship. Example - The new roof from last year starts leaking, causing large damage inside the building and the contractor is not responding.

It is vital that you have the correct processes and contracts in place before work starts. If you don’t, you can kiss your $ good buy, because,

• It’s impossible to get insurance coverage for a claim after it’s happened
• Suing the contractor will take years. and even if you win, they will probably never have the ability to pay you back.

So how do you protect yourself on the front end?

Do these 3 things before hiring your next contractor to greatly reduce your risks.

• 1)Create a list of Insurance coverages and limits you require for any contractor working with you.
• 2)Require you are listed as an “Additional Insured” to their policy.
• 3)Work cannot start until you have a signed contract and certificate of insurance from their insurance agent (note: this is very important. I have had some of my own clients cancel their policies, to find out years later they doctored the date on the certificate of insurance and were using it with their clients as proof of insurance).

WAIT, what about the uninsured Handyman

It’s very common to have a handyman who does good work but does not have insurance. In this case, you have 3 choices;

• 1)They operate as an employee – meaning, you have no recourse if they cause damage. You are 100% responsible.
• 2)Have them work though another contractor on site as a subcontractor/employee of theirs.
• 3)Have them get insurance at a lesser limit. Possibly just a general liability policy.

Example of insurance requirements from a sample Independant Contractor agreement I have for my REI clients,

Schedule A

Work to be performed

This Agreement shall cover the following projects at the following locations:

________________________________________________________________________

Insurance Limits Examples

1. Workers Compensation (Statutory) and Employer’s Liability:

$100,000 each accident for bodily injury by accident; $100,000 each employee for bodily injury by disease; $500,000 policy limit for bodily injury by disease.

1. General Liability Insurance (CGL):

Commercial general liability on an occurrence coverage form. The limits of liability shall not be less than:

$1,000,000 each occurrence (combined single limit for bodily injury and property damage);

$1,000,000 for personal and advertising injury liability;

$1,000,000 aggregate on products and completed operations;

$2,000,000 general aggregate.

Additional Insured Endorsement: Additional insured coverage should be requested to include the Manager, and any other party, as may be required.

1. Automobile Liability Insurance:

$1,000,000 Combined single limit each accident for bodily injury and property damage. Include coverage on all owned, hired, and nonowned automobiles.

1. Certificates of Insurance:

Trade Contractor shall furnish certificates of Insurance and applicable endorsements to Contractor before Trade Contractor commences any work.

1. Insurance Requirements for Sub-Trade Contractors: Trade Contractor shall ensure that all tiers of his Sub-Trade Contractors shall maintain insurance in like form and amounts, including the Additional Insured requirements. Each Sub-Trade Contractor shall provide Certificates of Insurance and applicable endorsements to the Trade Contractor prior to the start of the Sub-Trade Contractor’s work on this project.