We have been having some fun with our last three-part blog series! In our first blog, we explained the importance of Los Angeles consumers hiring only bonded, licensed, and insured contractors to work on residential and commercial property jobs. In our second blog, we discussed where consumers can go to determine whether or not a contractor is licensed. In this third blog in our three-part Consumer Affairs Bulletin series, we provide additional tips on how consumers can protect themselves when hiring contractors to work on homes and commercial properties! This “grab bag” of tips is the product of many years of experience working here at Weinstein Construction, so enjoy!
Ask for “Additional Insured” endorsement in your contractor’s liability insurance policy
You should consider getting an “Additional Insured” endorsement on your contractor’s insurance policy! While your contractor may tell you that he or she has a general liability insurance policy (which is great!) you should then follow-up with the contractor to make sure that the contractor lists you, the consumer, as an “Additional Insured” on the policy! In insurance jargon, an “Additional Insured” enjoys the same benefits of being insured on the insurance policy in the event of a claim, in addition to the one who originally purchased the insurance policy! This means that, among others, an Additional Insured has the right to file a claim for damages against the primary insured’s insurance carrier!
Check for high limits in your contractor’s automobile insurance
As a consumer, you should also check to see not just whether or not your contractor has an automobile insurance policy, but also whether the policy’s limits are high enough for the task at hand! Many small contractors will low-ball an offer to work on your property, and then show up for work with vehicles that carry only the minimum auto liability coverage limits (as required by California state law). However, those minimum coverages are almost never enough to cover the costs of even a small accident that involves damage to a person or property, much less a serious accident!
At this point you may be wondering, so? What’s the worst that can happen? Well, if your contractor’s 4-ton truck is involved in an accident involving damage to property or to a person, and this accident happens during your construction project, or on your property, and if the contractor’s insurance coverage is very low, you may be the one who gets sued and have to pay the costs!
Check if your contractor requires you to be “Owner-Builder” on the project
Sadly, some unscrupulous contractors provide you a low-ball bid on your construction project, and they may even show up to do the work for you, but then they require you, the consumer and owner of the property, to obtain a building permit that lists you as the “Owner Builder” on the job. This type of an arrangement wrongly implies that you are personally providing your own labor and material, and let’s be clear, if you agree to be an “Owner-Builder” under the permit, you have just assumed all the responsibilities that are typically required of a licensed contractor!
Make no mistake, when you agree to become the “Owner-Builder”, you have agreed to be held liable to serious financial risk for any injuries that are sustained by the unlicensed contractor and his or her employees, while working on your property! Your homeowner’s insurance may not provide coverage under this scenario, and you may even be considered the “employer” of the contractor and his crews under state and federal law, and be required to withhold payroll taxes, provide worker’s comp and disability insurance to these “employees”, and even contribute to their unemployment insurance!
So, be aware that if you choose to do a project in this manner, you are taking a big risk, and we recommend that you reconsider and do the smart thing, which is having the contractor’s name on the city permit!
At Weinstein Construction Corporation, we are of course licensed, and our family-owned business has been in continuous operation under the same name since 1977! During this time, we have provided more than 80,000 free inspections to residential and commercial property owners in greater Los Angeles! Call us today at (888) 412-8363 for a free inspection and review of all your construction needs!
