A few pointed questions to your agent and you’ll soon see who pays – you do. Almost always. My pal Tim Weingartner at Farm Bureau Insurance offered some specific cases that are very helpful.
Q. What if your contractor’s ladder falls on your convertible – who pays for what?
A. Your auto policy will cover the damage, but you, of course, will pay the deductible. Your carrier will likely “subrogate” (i.e. try to collect from) your contractor and you will have to determine if it’s worth trying to recover your deductible.
Q. What if a similar event occurs one year later. Will that event be handled differently?
A. The event should be handled exactly the same. And hopefully not the same contractor. (One might infer that at some point the carrier will tire of covering a homeowner that routinely hires uninsured contractors.)
Q. What if a contractors equipment causes injury to member of the homeowner’s family – who pays?
A. This is really a great question because your HO policy would not cover the medical expenses for the injured family member. Your health insurance would have to be used. But the homeowner will pay the policy deductible.
Q. Will the contractor be sued?
A. There is the potential for the contractor to be sued.
Q. What if the contractor slips and breaks his leg on HO’s property while performing his work. Will HO insurance pay for contractor’s medical care?
A. Potentially, would depend if the HO is negligent. If not then the medical no fault limit would apply. Most all HO policies have a medical no fault coverage although a lot of policies that I see only have $1000 coverage. An example where this could be used is if you had some friends over and one of them fell and broke their wrist. You don’t have to be at fault and your medical no fault coverage would pay, up to policy limits, for their medical bills. If you only have $1000 coverage the policy would pay up to $1000 and if their medical bills were $10,000, their personal medical insurance would cover the rest and if they didn’t have any medical/health insurance they could sue you since it happened on your property and then your personal liability coverage would kick in if you were found to be liable. That is an example of why I recommend having that coverage at $5,000 or $10,000, it is only a few dollars more per year and it would take care of a lot of accidents.
Q. At what point do HO insurance rates go up?
A. A claim will have your rates go up unless it is weather related like hail. And even if you switch companies the claims will follow you just like a speeding ticket on your driving record. Because no insurance carrier wants someone to have a claim and switch companies. Some companies have what I call gimmicks that say your rates won’t go up if you have a claim but I believe that is calculated into your premium which means your premium will be higher. Pay it now or pay it after the claim.
Q. At what point does contractor face litigation for recovery of insurance carrier’s costs?
A. Pretty much any time an insurance company pays out money and someone other than the insured is at fault they can face subrogation. There have been cases where a renter damaged a landlord’s property and the renter didn’t have renters or liability insurance and had their paycheck garnished to cover the loss.
A home owner can and probably should – depending on the work being done – ask to see a certificate of insurance from a contractor to make sure that the contractor is insured.