It’s advisable to consider general liability insurance when hiring home improvement contractors. If contractor liability insurance isn’t provided and there’s an accident on the worksite–your home–you could be the one held liable for the damages. Contractor liability insurance is sometimes called errors and omission coverage.

Casual Workers, Professional Home Contractors and Insurance

Professional home improvement contractors should have their own liability insurance. If the contractor hires her own employees, the contractor also needs to have workers compensation. In most states proof of contractor liability insurance and workers compensation is required before issuing a contractor license.

Casual workers, who are often hired to perform lawn mowing, painting and minor maintenance, often lack general liability insurance. If a casual worker is injured on your property, damages should be covered by your homeowner’s general liability insurance—but this may not be adequate for serious injuries.

The distinction between casual workers or self-employed contractors and professional home improvement contractors is important, as casual workers are hired more often than professionals. Thirty-three percent of homeowners hire casual or self-employed contractors, compared to the 12 percent of homeowners who hire professional home improvement contractors.

Uninsured Home Improvement Contactors

Many homeowners don’t fully understand the need for contractor liability insurance. Only 33 percent of home owners who hire professional home improvement contractors ask for proof of insurance. Somewhat alarmingly, only 40 percent of contractors offer proof of liability insurance.

In some states, contractors can bid on home improvement projects without contractor liability insurance or workers compensation. Any actual work performed by the contractor, however, cannot be performed without insurance.

Contractor liability insurance is extremely important: it protects against injury, property damage and negligence. And while it’s the contractor who takes out the liability insurance and workers compensation, it’s the home owner who’s protected. Without contractor liability insurance, it’s the homeowner who’s held liable for any damages on his or her property.

Asking for Proof of Contractor Liability Insurance

A homeowner’s best policy is to ask home improvement contractors to provide written proof of contractor liability insurance and/or worker’s compensation. A registered home improvement contractor should be able to provide such documentation easily.

If a homeowner chooses to complete home improvement projects himself or hire casual workers, he should check with an insurance agent to ensure his home’s general liability insurance is sufficient to cover possible damages. If not, it may be necessary to add an insurance rider to increase coverage during the home improvement project.