Property Damage Caused By A Contractor: Will Homeowners Insurance Cover It?

If a contractor causes damage to your house, homeowners insurance often covers the cost of repairs. However, other circumstances involving a contractor working on your house, such as bad workmanship, may not be covered by home insurance.

Here's an outline of the numerous scenarios that could arise if a contractor causes damage to your house, along with some helpful hints.

Coverage For Accidents

Suppose a contractor causes an accidental fire or other damage to your home. In that case, your homeowners' insurance may assist cover the repair expenses - though your insurer will almost certainly seek reimbursement from the contractor's insurance company.

Before beginning the project, verify that your contractor carries the proper insurance. If a contractor is hesitant to check his coverage, the Insurance Information Institute recommends selecting another (III).

Poor Craftsmanship

According to the III, if the contractor just does a poor job — poorly installing roof shingles, for example – homeowners insurance is unlikely to compensate, as basic policies often restrict coverage for faulty or insufficient workmanship. Rather than that, you'd have to seek recourse from the contractor - in this case, by fixing or replacing the shingles.

Hire a reliable contractor from the start. To investigate candidates, PropertyCasualty360 recommends contacting state licensing organizations and the Better Business Bureau, thoroughly analyzing previous job records, and even doing a professional background check.

Damage As A Result

While homeowners insurance normally does not cover bad workmanship, the III notes that it may cover harm caused by the job, as long as that damage is not specifically excluded in your policy. For example, suppose a plumber fails to seal the joints between two pipes properly, resulting in water pouring out all over your basement floor. The water damage will almost certainly be covered, but not the expense of resealing or otherwise repairing the badly fitted pipes.

Consult your agent before embarking on any renovation job to ensure you fully grasp your coverages.

Limitations On Coverage

According to the III, while a normal homeowners policy covers your current house during a remodel, such coverage may not immediately extend to a newly constructed room or addition. Verify the coverage limits on your homeowners' insurance and consider expanding them if, for example, a room addition increases the value of your home. This may provide you with the peace of mind that comes with knowing that your policy may assist in safeguarding your entire home in the event of an unexpected event, the III states.

Consult your insurance agent before beginning a renovation project to update your policy and, if necessary, expand coverage to the new location. Additionally, you may want to inquire with your agent about whether you can benefit from an add-on coverage called theft of building supply coverage, which protects construction items during your project.

When you renovate your property, you face numerous choices. That is why it is critical to work with the proper contractor and have adequate insurance coverage in place so that the only decision you will have to second guess is your paint or tile selection.