If an uninsured contractor is injured on your property, you could be liable. Or if a contractor causes damage to your home and lacks insurance to cover it, you may have to file a claim under your own homeowner’s policy, affecting your claims history and future premiums.
Verifying insurance before work begins is one of the simplest ways to protect yourself. Rhode Island law requires contractors in most licensed trades to carry insurance as a condition of licensing, but requirements vary by trade and license type.
A contractor should carry general liability insurance to protect against claims of bodily injury or property damage arising from work or operations. It also covers accidental damage to your foundation, a broken water line, or a fire.
When reviewing a contractor’s general liability certificate, check the coverage limits, which should be at least $1,000,000 per occurrence. Always examine the named insured to confirm that the business name on the certificate matches the contractor you are hiring, and review the policy period to ensure it is active and remains in force during your project.
You should also request to be listed as the certificate holder so you are notified if the policy lapses. Before work begins, you should also ask whether your contractor carries workers’ compensation insurance, which covers medical expenses and lost wages for workers injured on the job. In Rhode Island, most employers with one or more employees are required to carry workers’ compensation insurance.
This coverage matters to you as a homeowner because, without it, an injured worker may have grounds to file a claim against you as the property owner. If a contractor works alone and has no employees, they should be able to provide documentation showing they are exempt or have elected coverage for themselves.
Another coverage to consider is builder’s risk, sometimes called course of construction insurance, which covers a structure during construction or renovation. It protects against losses from fire, theft, vandalism, wind, and other perils that could damage the structure or materials before the project is complete.
Depending on the scope of the project, either the contractor or the homeowner may be expected to carry this policy. This is a detail that should be addressed explicitly in your contract before work begins. For major renovations or new construction, it is important to clarify in writing who is responsible for builder’s risk coverage and what it includes. Asking for proof of insurance is standard practice, and any reputable contractor should provide it without hesitation.
This is what we often suggest our clients request and review:
· Before signing any contract, you should request a Certificate of Insurance (COI) from the contractor’s insurer that summarizes their coverage
· Make sure both General Liability and Workers’ Compensation are listed and appear on the certificate
· You may want to contact the insurer directly, since certificates can be forged, and confirm the policy is active
· Check the Rhode Island contractor licensing database, which maintains a public database where you can verify a contractor’s license and status
If a contractor is uninsured or underinsured and something goes wrong, your options are limited. You could pursue the contractor directly through civil litigation, but recovering damages from an individual or small business without assets or insurance is often difficult and time-consuming.
In some cases, a homeowner’s policy may cover contractor-caused damage, but this coverage is not guaranteed and depends on the specific policy language and the nature of the loss. Filing a claim under your own policy also means paying your deductible and potentially affecting your claims history.
Your independent agents work with many contractors for their coverage and can also advise you on what is the best policy for you to have in place.
