HomeImprovementFilter: Is there such a thing as short-term contractor insurance? If so, do I want it?

May 3, 2006 3:55 PM

Is there any way to get insurance on behalf of an independent contractor for a specific manual-labor project? Has anyone done this? If so, how much was it and is there anything I need to know to be smart about arranging this?

So...I've got good sources for pretty decent quality and well-under-market labor for different home improvement work. Since I need to get my house ready to show-n-sell and have very little in the way of free time to make this happen, this is looking pretty darn attractive. I've used one of these guys before for interior painting work with great results, and I'd like to hire him and some of his buddies to paint the outside of my house - it would probably save me at least several hundred dollars over most more "professionalized" options. BUT...I'm sure that he has no insurance or protection of any kind (like, for on the off chance that he falls off a tall ladder and breaks his neck while working on my house!) and this has me a little queasy. Aside from the personal liability issues and the desire to protect myself, I'd feel incredibly crappy if anything Bad happened. What options do I have?

posted by shelbaroo to home & garden (5 comments total)

Putting aside the issue of employing people without proper tax accounting, you can call your home owner's insurance and ask about an umbrella liability policy rider. State the truth - that you will have people working in your home doing home improvement and you are concerned about your liability if one of them were to fall and get injured while doing so. They'll have something they can sell you.

However, at such a time you need to collect - Grod forbid - you may find yourself dealing with questions of legality and your insurance company will want to hash out matters with the person you are employing - things relating to what insurance s/he has, workman's comp, etc. To some extent you might be able to say gosh, I had no idea this wasn't all completely above board and that this wasn't a legitimate contractor. Or you may not, and your insurance company may then refuse to pay.

Morally it's somewhat gray, I think. After all, it's not your obligation to ascertain that that every storefront you walk into is properly licensed and paying their legal taxes. On the other hand, you don't need to go looking in this case - you flat-out know this is a fly by night deal. I mention this not to scold you - the cleanliness of your soul is your issue - but to warn you that any insurance coverage you have or get may well be subject to this kind of question. My auto insurance policy, and likely yours, contains very clear language that I am not covered for damages I incur when driving drunk. Extra-legal contractors may cause you a similar problem.
posted by phearlez at 4:07 PM on May 3, 2006

In addition to the umbrella policy, check into your state's workers compensation laws. I have an account in my state, that I don't pay into, in the very event that my cleaning lady, or someone else I bring on to my property, gets hurt and doesn't have coverage. If something happens, then I pay into the system. But I don't now how different states work - but check yours.
posted by dpx.mfx at 6:04 PM on May 3, 2006

I think you're getting your cart and your horse confused here, shelbaroo.

If you are paying these guys as independent contractors, you're supposed to believe, based on reasonable due diligence on your part, that they are duly licensed and insured, so that you and their employees working on your property are protected in the event the Bad Happens. Your homeowners policy liability section covers you for the risk of having visitors and tradesmen injured on your property, due to negligence on your part. If you feel that there is a greater likelihood of injury due to negligence on your part while painting your house is happening, or if you feel your overall liability exposure may be greater due to the numbers of people who may simultaneously be on your property while work is being done, you might want to buy excess liability coverage. But why would you be more likely to be negligent while the painting is being done, unless you are helping paint, and likely to put up ladders badly, leave tools about carelessly, etc.?

If you know that these people aren't licensed or insured, you are failing to exercise due diligence in employing them as contractors, and if they damage your house while doing the work, you'll have no recourse, other than you trying to sue them directly. This alone should give you pause when considering any savings you think you might get. If they should hurt themselves while working on your home as independent contractors, they'd have to prove you were somehow negligent in maintaining access or condition of your premises, or knowingly furnished substandard materials or tools, in order to collect anything from you as liability damages.

If you hire them as employees, rather than as independent contractors, your obligations are significantly greater, and there is no way you'd want to do this for a single "primp to sell" for one home. So, don't do this.

Liability insurance and contractor's bonds are costs of doing business for any legitimate remodeling or home improvement contractor, and while laws and requirements in some jurisdictions vary, no readily available insurance product is going to allow you to assume risks that are properly another parties at lower cost, that I'm aware of. Essentially, there's no "uninsured motorist" type of coverage for home improvement situations, where your failure to exercise normal due diligence isn't going to invalidate your coverage.

But hey, IANAL or an insurance agent, and I don't even know where you live. So this is all just Random Internet Guy musings, and you should check with your locality and insurance folks for the facts that really pertain to your situation.
posted by paulsc at 12:11 AM on May 4, 2006

I very seriously doubt (and the doubt comes from state statute variation), that you would have any kind of workers' compensation exposure in this case. You are writing a check, not putting people on a payroll. If you verbally direct or work with the painters, a slim case could be made that they were not independent contractors, but under your control. So stay out of their way as much as possible when they are working.

To minimize liability issues, have them use their own equipment (not borrow your ladder, for example), and go ahead and check the outside of your house for potential hazards before the work starts. Doing these small things should CYA for a short term project like this.

(my word is far from gospel, but I do work in insurance)
posted by rainbaby at 5:22 AM on May 4, 2006

Thanks everyone, and especially paulsc and rainbaby - this info is very helpful in getting my head clear about this stuff. It's true that I would in no way be hiring "employees" - these are just guys who work in the trades (with their bonding/insurance in those contexts probably covered by their employers), I know from the 'hood, and who always seem willing to take on clearly defined short-term projects for some extra cash. It never occurred to me that such a thing could be construed as dodgy on my part as phearlez indicates...

I will get some bids from some listed-in-the-yellow-pages outfits and see how the cost-benefit analysis seems to stack up then. I'll also root around the internets and see if there's some kind of standard contract language that will allow the liability for such things to fall squarely on whatever insurance/bonding this guy does or does not have. I'm not as concerned with potential damage to my house from this work - but knowing that I'm not liable for what these guys might do to themselves would put my mind at ease.
posted by shelbaroo at 8:45 AM on May 4, 2006