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Insuring Risks That Concern Remodeling A Home
You might not think about how you are taking on additional risks when remodeling or building a dream home. You might not even know that you can be liable for these risks to begin with.
A lot of times, homeowners only realize the type of potential liabilities they have stepped into when something bad happens. And that is too late.
Home owners usually assume that contractors are responsible for anything that happens at a worksite. What you have left out is that this worksite is your house, your property, your premises.
Reputable companies will probably have their own insurance to protect themselves. They might even advise you to get properly covered in case something happens that is under your liability. These are the people you would want to work with… even if they charge a higher price.
Even so, there is always a chance that you ignore all these warnings and choose to remain obnoxious.
Here are some of the risks that you can open yourself up to.
Property damage during work-in-progress
When you are building a new house, have it down in writing explaining which party is responsible for insuring the property.
Finger pointing is a common place when disaster happens. And documents could eliminate all that confusion.
Also as there are only 2 parties consisting of the builder and you, the buying party should name the other party as the loss payee.
You would preferably want the building to incur these costs.
Request for documentary proof that the relevant insurance is in place before commencing work. If you are already the homeowner, and is required to buy, go for a homeowner’s policy as it has a wider coverage.
When you are undertaking remodelling instead of a new construction, review your existing homeowner’s policy.
If the building coverage limit is inadequate, take steps to revise it to an amount that takes into account replacement costs for the new home after renovations.
Theft is always a problem in the contracting business
This is because materials and equipment are often left at the worksite overnight for convenience.
Sometimes cheap labor can also attract the wrong type of workers that an employer wants.
This is a very real risk.
Even retailers with billion dollar tracking systems can suffer from inventory shrinkage that can never be resolved. So much so that they can only realistically minimize loss from theft rather than completely wipe it off the plate.
It can sound outrageous when you are liable for the loss of materials you are already paying for.
But this is your home and that is the way it is.
To protect yourself from the indignity of such a scene happening, get your contractor to agree that they are liable for all material until the job is completed.
Put it down in writing.
An alternative is to get a theft of building materials endorsement on top of your existing home policy.
You are actually liable for injuries suffered at your place.
Although it is covered by your basic home insurance, you can get a more comprehensive umbrella policy if you feel that coverage is insufficient.
More reputable contractors will do the honorable thing and accept the blame especially when accidents are due to their own lack of safety measures. This is why choosing contractors is a very important activity that you should take seriously.
But in case you want a clear line to be drawn, get them to agree on a written statement that they will incur all costs of a lawsuit and judgment resulting from injuries to their workers. You might want to see this as well before commencing work.
Workers can suffer huge losses from lost wages and medical expenses when they get injured. So huge is the loss that they can be willing to take you to court to get what they are due.
When these things happen, not only will your pocket take a hit, your public image will be vandalized as well.
And no. Your homeowner’s policy does not include this.
The simple solution is worker’s compensation insurance. The complicated issue is who will buy it – you or the contractor.
Whatever turn out in negotiation, don’t start construction until this is in place. It can bring along a whole host of problems.
Property damage or injuries suffered after construction
You might have officially taken over your new home from the contractor thinking that every little issue is resioved. Little did you know that the air-conditioner in the living room is not properly fixed.
It then falls down send you or a family member into the hospital. Coverage from these scenarios come from a completed operations endorsement. Get your contractor to buy this if it is a big issue for you.