Dr. Phil likes to say that if you choose the behavior, you’ve also chosen the consequences. Projects involving contractors are one of the cases where Dr. Phil’s perception fits perfectly. Such projects are often big ones, and (God forbid) if something goes wrong, the chances are that the damage could be costly, financially. The worst-case scenario is that someone’s life may be in danger. To avoid all these unnecessary complications ask contractors for insurance, and to help you understand how serious this is, let me point out a few things.
It’s Not My Fault!
That’s what your contractor will either imply or say explicitly and without shame, if you make the mistake of hiring one without insurance. But what is the significance of the contractor providing proof of insurance in the first place?
Accidents happen, and when they do, someone has to be held responsible, and someone has to pay for the damages. You don’t want that person to be you, especially if it is not your fault.
What Insurance?
Any contractor hired for a project ought to be in possession of a General Liability Insurance. Moreover, if he or she will involve subcontractors, carpenters, electricians or any other workers in the project, he or she should also have Workers Compensation Insurance and Auto Coverage Insurance (only if vehicles will also be involved).
General Liability Insurance is a guarantee that the contractor will take care of any damages that take place while working on your project. The Workers Compensation Insurance is for handling any accidents that involve the third parties the contractor brings into the project. The auto or car insurance does what you already know; takes care of any vehicle-related damages.
What You Stand to Lose
Now, if for some reason you were ignorant and happened to hire a contractor without confirming their status as far as being insured is concerned, if some accident occurred while they are working on your project, believe it or not, they might sue you.
They’ll say the accident was your fault; that it was your house, or office, or poor working conditions, or whatever they’ll come up with for pinning the blame on you, just to avoid paying for the damages. I’m sure that doesn’t sound nice at all, and it’s a situation you don’t want to deal with. The damages could be in terms of thousands of dollars or millions. Again, worst case scenario, it could involve someone’s health.
Another danger of hiring a contractor without proof of insurance is that they may disappear before completing the project. This scenario is particularly true if you happen to be loaded such that you pay them in excess before they complete their task.
Protect Yourself, Protect Your Assets
You can see that you stand to lose way too much just for ignoring this essential aspect of the client-contractor relationship.
Ask contractors for proof of insurance before hiring them for your project. It’s that simple; just ask them for it. If a contractor indicates that they have none or start behaving funny regarding your reasonable request, keep looking; that person’s troubles are not worth your time and money.
Furthermore, if a contractor seems cheap, and you haven’t yet confirmed whether they are insured, the chances are that they are not. Important projects should cost as much as their degree of significance.
When dealing with expensive projects, you should always take the necessary measures to ascertain that you only pay for what the project is worth; not unnecessary extra damages. Always ask your contractors to provide proof of insurance before engaging in such crucial projects.