When considering hiring a contractor for a project at your home or business, be sure to verify that they carry the proper insurance before hiring them.  Often an overlooked aspect in the decision process for many homeowners and business owners is to verify a contractor’s insurance.  The contractor’s insurance is important because it is not only designed to protect the contractor, but it is designed to protect you.  
(1)General Liability Insurance protects damage to your property.  What would happen if your electrician accidentally caused a fire?  If the contractor does not carry General Liability Insurance, then your homeowners or business insurance would have to cover the damage.  Since claims against your own policy cause your future insurance rates to increase, you’re penalized for the contractor’s mistake.  If your contractor carries the proper General Liability Insurance, then their insurance policy covers the damage and their insurance rates increase, not yours!
(2)Automobile Insurance indirectly protects you from legal liability.  For example, if your contractor hits a neighbor’s child with their van while the child is playing on your driveway, you can be held legally liable for any injuries since you hired the contractor.  If the contractor maintains adequate Automobile Insurance for their vehicles, their insurance would pay for any injuries or damages.
(3)Workers Compensation Insurance protects the contractor’s employees if they’re injured on the job.  Why is this important to you?  If the contractor does not protect their employees with Workers Compensation Insurance, the employee can sue you for being injured while on your property.
So, how do you ensure that your contractor is properly insured?  Request a Certificate of Insurance listing you as the Certificate Holder.  A Certificate of Insurance is a legal document that provides a brief summary of the contractor’s insurance coverage including the coverage limits and effective dates.  You want to be listed as the Certificate Holder so you can prove that the contractor provided this document to you should any legal action be taken against you for something the contractor did while working on your property.  It is also recommended that you contact the insurance agent at the phone number listed on the Certificate of Insurance to verify that the Certificate of Insurance is valid before work begins.

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