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Homeowners Insurance and the Casual Worker

Homeowners Insurance and the Casual Worker

Finding someone to do certain tasks around your home can be arduous. You can call 15 different companies from the phone book or an online search and get 15 different quotes, if all 15 of those contractors either answer the phone or return a call.

It may be tempting to go with the least expensive quote, but cheaper might end up costing you more in the long run. To avoid unexpected expenses, you should take steps to protect yourself.

Fernandez v. Lawson

In 2002, Mr. Lawson hired a tree service to remove a 50 foot tree from his property. Mr. Lawson received a business card from the owner of the tree service bearing a license number. He requested proof of insurance and was provided a certificate that was expired with a promise that the most recent insurance certificate would be provided the next day.

The next day work commenced and Mr. Fernandez, an employee of the tree service, sustained serious injury while attempting to remove the tree. Because his employer was not licensed to remove a tree in excess of 15 feet and did not have workers compensation insurance, he sued the homeowner, Mr. Lawson, claiming that since he was unlicensed he was a de facto employee of the Lawson household.

While the lower court did not agree with this statement, the appellate court overturned the decision, deciding in favor of Mr. Fernandez. The court stated that any homeowner hiring an unlicensed and uninsured company to perform work becomes the employer of not only the business, but also its employees.

Be The General Contractor

On a job where a General Contractor (GC) is required, the GC may subcontract out certain work. Since he is ultimately liable for any work performed by his employees or his subcontractors he does 3 things:

  1. Carries a lot of insurance for himself and his employees.
  2. Verifies that his subcontractors are properly licensed in their fields.
  3. Verifies that his subcontractors are properly insured, including workers compensation insurance.

When you hire a contractor to perform work around your home, you become the GC on that job. If the person you hire is unlicensed and/or uninsured, you are both their employer and their insurer.

Does Your Contractor Have a License and Insurance?

How can you verify that your contractor is licensed and insured? One way is to ask, but the contractor may not always be truthful in order to get the job. A low bid when compared to other quotes may indicate that a contractor is unlicensed and/or uninsured.

Many states have contractor licensing portals on their websites that allow you to check the status of licenses by license number, business name and contractor name. California’s is here. If the website does not have a portal, call the state labor board.

Always ask for proof of insurance from your contractors. Ask that proof be emailed to you directly from the insurance broker or company. If that isn’t possible, call the broker or company on the certificate to verify coverage before work begins.

You Aren’t Insured For This

Homeowners insurance excludes medical payments and other coverage for employees that are required by law to be covered under workers compensation. That includes your employees and the employees of a contractor you hire.

If you have a workers compensation insurance policy for domestic employees you may not even have coverage under that policy. Some policies and state law define an employee as someone who works x number of hours in y number of days. The tree trimmer you hire for a one day job, or the lawn guy who mows twice a month probably won’t qualify.

A quick job might turn out to be a lifetime of pain and suffering for an uninsured contractor, as well as a strain on your own financial resources. Talk to your own insurance broker about ways to protect yourself and your family when it comes to hiring casual workers.

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