All companies and individuals hired to complete work at or in the home should carry any type of insurance required by the state. EBSCO Research requires that all Best Pick and Honorable Mention companies, no matter which state they service, carry general liability insurance. In addition, EBSCO Research requires that Best Pick and Honorable Mention companies comply with any state regulations regarding insurance. For example, Georgia and Illinois currently require contractors to carry workers’ compensation insurance in addition to general liability, whereas Texas does not require contractors to carry workers’ compensation. See below to find out more about liability insurance, workers’ compensation, and tort liability.
General Liability Insurance
Liability insurance is designed to pay for damage resulting from a contractor’s work. For example, if a tree service cuts down a dead tree in your front yard and the tree accidentally falls through your roof or through your neighbor’s roof, the tree service’s liability insurance would most likely pay for damages. If, instead of falling through your roof, the tree fell and injured your neighbor, the tree service’s liability insurance would again pay.
Workers’ Compensation Insurance
Workers’ compensation insurance is designed to compensate the injured worker in the event of a job-related accident. If the tree falls onto and injures one of the tree service’s employees, the tree service’s workers’ compensation insurance should pay the injured employee’s hospital bills and lost wages. Since many company employees are injured on the job each year, workers’ compensation insurance is quite expensive. Some high-risk home service companies claim that as much as 40% of their cost is workers’ compensation insurance.
In addition to a workers’ compensation claim, an injured worker may be able to make a tort claim against the homeowner. While a workers’ compensation claim is limited to hospital bills, wages, and disability, a tort claim has no limitation. Tort claims result from either active or passive negligence on the part of the homeowner. Active negligence results when the homeowner does something that contributes to the accident, such as lending the worker a tool or holding the ladder. If the tool injures the worker or if the ladder falls, a tort claim may exist. Passive negligence results when the homeowner fails to do something like warn the worker of a known danger, such as a hole in the yard. If the worker gets hurt falling into the hole, the worker may be able to make a tort claim against the homeowner.
To limit tort liability exposure, homeowners should always warn workers about any known hazards, should never lend tools to workers, and should never help workers.
How to Verify Insurance Yourself
Just as some individuals do not have health insurance because of the cost, some small companies do not carry proper insurance for the same reason. From the small business owner’s perspective, “Insurance is an expense that can be eliminated. . . . After all, we haven’t had an accident in years.”
Check insurance yourself. EBSCO Research recommends hiring properly insured companies. The only way to determine if the contractor you are planning to hire has insurance is to request that the contractor’s insurance company (or companies) sends directly to you a copy of the insurance certificate. The certificate should have your name as the certificate holder, so that if the insurance policy is cancelled before the expiration date, the insurance company will notify you of the cancellation. Because some contractors have actually forged such documents, you should never accept a copy of an insurance certificate directly from the contractor. A typical insurance certificate lists the types of insurance the contractor has through the company and includes the policy number, effective dates, and policy limits. If a section is not completed, the contractor does not have this type of insurance coverage through the certificate-issuing insurance company.
EBSCO Research only checks the insurance of Best Pick and Honorable Mention companies. However, since insurance can expire or be cancelled at any time, homeowners should always check such information for themselves.