Have you decided to act as your own general contractor while building a new home? If so, there is one important question you need to answer before a single shovelful of dirt is moved—do you have adequate liability protection? If a subcontractor you hire is injured on the job you could be held responsible for their injuries. To avoid an expensive out-of-pocket payment and ensure your project runs smoothly, you need to make sure you have adequate coverages in place.
Know Your Liabilities:
When you act as your own contractor you essentially become an employer, making the subcontractors you hire your employees. If they are injured during the course of construction you have the same responsibilities as any other employer has to their employees.
While a few states allow an exception for those building their own homes, in most cases you are required to carry workers’ compensation insurance to provide benefits to injured workers. If you find yourself in an area that does not require you to have workers compensation coverage, you may be able to rely on your homeowners policy to some extent.
Don’t leave anything to chance. Before beginning construction on your new home, don’t hesitate to consult your coverage specialist at GRBM Insurance. By reviewing your situation with an expert you can be sure that all your potential liabilities are covered.
The Danger of Relying On Homeowners Insurance
Depending on your location you may have no choice on whether or not to provide workers’ compensation coverage. However, even if coverage is optional in your area you should strongly consider it.
The possible medical costs resulting from an injury can be exceedingly high. While your Homeowners policy may react in the event of an injury, it is not designed explicitly with high cost medical bills in mind. This creates a substantial possibility that the cost of a claim will exceed the limits of your policy, leaving you to pick up the remainder. On the other hand, workers’ compensation coverage is structured with higher limits to absorb the high claim costs generated by a serious injury.
Be Selective with Subcontractors
When selecting subcontractors make sure you do your research. Ask for references, not only to check on quality of work, but also to make sure that they acted in a safe and professional manner on past jobs.
Most importantly, ask if they carry their own insurance. By choosing subcontractors with their own insurance you can reduce your potential liability and provide yourself with an additional safeguard. When obtaining your own workers’ comp coverage, only working with insured subcontractors may also help you obtain a lower premium.
This is not a decision that should be made hastily, get the facts, and figure out what makes sense for you.
