Renovations: Risky Business
Know the Risks When Hiring Contractors
Home renovations includes risks to the homeowner, the contractor, the worksite construction workers, visitors and neighbours. That’s a lot of accountability! Construction worksites can be hazardous, and despite everyone’s best efforts, accidents can happen. A construction worker could get injured or the contractor could accidentally damage your neighbour’s property; mitigating your risk is vital. How can you do that?
In the non-regulated industry of construction it is imperative to hire bonded, licensed and insured contractors.
In our experience, speaking with homeowners, who only thought the contractor was insured, they tell us “we felt embarrassed to ask for proof of credentials. The contractor seemed to be offended we asked, and the relationship went sour afterwards” You shouldn’t have to feel this way because the RISK is yours! eRenovate.com is the solution!
Hiring an unlicensed contractor is a financial risk, as there’s a higher likelihood the work will not meet local building code requirements, and if this happens, you will be responsible for ensuring the repairs are redone properly and that work is up to code. You also run the risk of having your homeowner’s insurance policy voided if a claim arises as a result of the work done by an unlicensed contractor.
Hiring a licensed contractor limits your risk. Licensing offers verification that the contractor has met certain industry training standards. Therefore, there’s a higher probability their work will meet local building code requirements. Also, licensed contractors are more likely to carry insurance and workers’ compensation coverage.
Check with your provincial, state and local municipal offices to verify whether licenses are required for the specific type of home professional you are hiring. If licensing is required, ask the contractor for a copy of their license and check it is valid.
Uninsured contractors can expose you to substantial financial risk in the event of damage to property or work-related injuries. Confirm you contractor carries comprehensive liability and Worker’s Compensation insurance.
It’s imperative the contractor can cover the expenses related to anything that goes awry while working on your property. Failure to hire an insured contractor could put you at considerable risk, for example if the uninsured or under insured contractor hits an underground gas line, you’re accountable.
The contractor’s liability insurance will shelter you in the event the contractor, his employees, and any sub-contractors brought onto your property, cause damage to your or a neighbour’s property.
During the vetting process ensure the contractor has full liability coverage. Ask them for a copy of their Certificate of Insurance. Check the document’s expiry date and confirm it is current. If a contractor is uninsured, walk away.
Many property owners don’t realize that they, too, need enough insurance coverage albeit their contractor is fully insured. You should call your insurance broker to explain in detail the renovation plans “before” breaking ground. You may need to modify your policy to protect yourself during the project. For example, you may require a “vacancy permit” if you vacate your house for the duration of the renovation.
Workers’ Compensation Insurance
Administered by provincial and territorial governments in Canada, & State government in USA, Workers’ Compensation programs protect employees from the financial difficulties associated with work-related injuries.
Workers’ Compensation insurance protects you from liability. If a construction worker gets injured while working on your property, and your contractor doesn’t have Workers’ Compensation insurance, you’re on the hook for that worker’s claim of lost wages and, if required, rehabilitation.
Your homeowner’s insurance policy might cover the injured worker’s claim, after you pay the deductible. Though, there is a risk that this claim could increase your homeowner’s insurance policy rates and make it harder for you to get insured down the road.
During the hiring process confirm the contractor has Workers’ Compensation insurance for their employees. Ask for a copy of their Letter of Clearance.
In summary, always exercise due diligence when hiring a contractor. Look for contractors who follow good business practices, like earning their credentials and paying for insurance coverage. eRenovate.com is the protection you need: Connect with Bonded by eRenovate™ Pros by using the eRenovate Post My Project tool, and enjoy Peace of Mind with the eRenovate Guarantee which offers $25,000 Deposit Payment protection and 88 Day Workmanship Guarantee.
Tom Cordeiro AKA “Chief eRenovator”, is the owner and driving force behind eRenovate. A home-grown Canadian company, eRenovate was founded by homeowners who had experienced ‘renovation let-downs’. Tom is dedicated to helping ease the stress involved in starting a renovation project by connecting Canadians with local, Bonded by eRenovate™ Pros, and offering timely, expert advice.