Does Homeowners Insurance Cover Contractor Mistakes?

You're probably well aware that your homeowner's insurance protects you from loss or damage to your home and its contents in the event of something like a fire. But would your policy cover you if someone else were responsible for that fire, such as a general contractor you hired to fix your plumbing? What if someone you hired to re-shingle your roof dropped materials on your neighbor's car and seriously damaged it, would you be liable? Most homeowners just assume that their home insurance policy would cover these events, but that is not always the case.

Policies Vary Widely

Unlike car insurance policies that must have a minimum level of coverage, home insurance policies can vary tremendously. You will find some home insurance policies that are comprehensive, meaning they provide coverage for a wide array of events. On the other hand, some policies are very specific about what they will cover and are not as inclusive. These more specific policies will probably not cover any event that is not explicitly listed in the policy. If you have such a policy, you will probably not be covered for any mistakes made by a contractor you hired to work on your house.

Preparing for Contractor Work

Before you allow a contractor to begin working on your home, make sure that your home insurance policy will provide coverage for liability claims if the contractor makes a mistake. With some policies, you must purchase this additional protection if you've hired a contractor to do work. If you have this coverage, you can rest easy knowing that your home will be covered should a contractor-related accident befall it. When you contact your home insurer to verify this information, make sure you give them as much detail as possible. That is, provide the name of the contractor or company that is performing the work, the nature of the job, and any other relevant information. Be sure to specifically ask if your existing policy will cover contractor mistakes or accidents. If your home insurance agent assures you that your policy does cover the event you inquired about, ask your insurer to send you written verification of coverage.

When Your Policy Doesn't Provide Coverage

If you find out that your existing policy does not provide protection for contractor accidents or mistakes, you always have the option of revising your policy to include coverage. When you update the policy, request that your insurer send you a copy of your new policy in writing. Read through the new policy thoroughly so you know that coverage for this event is indeed now included. Another option is to purchase a temporary umbrella liability policy to supplement your home insurance policy while the contractor is working on your home. Before you purchase the umbrella policy, though, make sure that it offers coverage for contractor perils.

What about Contractor Liability Insurance?

Usually, contractors cannot perform any work unless they carry liability insurance. The purpose of general contractor liability insurance is to protect the contractor from certain liability exposures. These exposures might include liability from contractor mistakes, accidents, products, etc. Before hiring a contractor, you should request that he/she offer proof of liability insurance to you. Some contractors are underinsured, which means you might end up picking up the bill if the contractor makes a mistake. Thus, even if your contractor is fully insured, it's better to be safe and purchase extra protection on your home insurance policy to cover contractor-related mistakes and accidents.