Published: November 2015
A contractor you've hired to do some work uses a power sander to remove layers of old paint, and he inadvertently sparks a house fire. Will your homeowners insurance cover the damage?
In a situation like this, homeowners insurance typically helps pay for the damage, but it may not provide protection for other scenarios you may encounter with a contractor working on your home. Here's an overview of how various situations might play out, along with some tips to keep in mind.
If a contractor accidentally causes a house fire or some other damage to your home, you'll probably find that your homeowners insurance will help cover the repair costs — though your insurer would most likely reach out to the contractor's insurance company for reimbursement.
Tip: Make sure your contractor has adequate insurance before you begin the project. If a contractor is unwilling to verify his coverage, consider hiring someone else, suggests the Insurance Information Institute (III).
If the contractor simply does a poor job — improperly installing roof shingles, for instance — homeowners insurance likely won't rectify the situation because a standard policy typically excludes faulty or inadequate workmanship from its protections, according to the III. Instead, you'd have to approach the contractor for redress — repairing or replacing the shingles, in this instance.
Tip: Hire a reputable contractor up front. To vet candidates, the insurance industry site PropertyCasualty360 suggests checking with state licensing agencies and the Better Business Bureau, carefully inspecting past job histories and even performing a professional background check.
While your insurance typically doesn't cover poor workmanship, it may cover damage that's caused as a result of the work, the III says, as long as that type of damage isn't otherwise excluded somewhere in your policy. For instance, if a plumber does a poor job sealing the seams between two pipes and it causes water to suddenly pour out all over your basement floor, the water damage would likely be covered, but not the cost to reseal or otherwise repair the poorly installed pipes.
Tip: Talk to your agent before you begin any renovation project to make sure you understand your coverages.
A typical homeowners policy covers your existing home during a remodel, but that protection may not automatically extend to a newly built room or addition, according to the III. Make sure you check the coverage limits of your homeowners insurance and consider increasing them if, for instance, a room addition caused an increase in your property value. This may help give you the peace of mind that comes with knowing your coverage could help protect your whole home, just in case the unexpected occurs, the III says.
Tip: Talk to your insurance agent before beginning a renovation project so that you can update your policy and extend coverage to the new space, if needed. You may also want to ask your agent about whether you may benefit from an add-on protection called theft of building supply coverage, which may protect the construction materials while your project is in the works.
You make a lot of decisions when youâ€™re renovating your home. That's why it's important to partner with the right contractor and make sure you have sufficient insurance coverage in place, so that the only decision you might end up second guessing is your paint or tile choice.