Hiring a contractor for your business? Make insurance a priority.

Controlling costs and staying flexible are important to your business, and at times that means hiring a contractor.

When hiring a contractor to help with your business, it is important to do your due diligence to ensure your business is protected. A hired contractor may present you with an opportunity to save money in the short term, but the long term risk you are exposed to may seriously impair your business operations.

How to protect yourself as a business owner

Ask the potential contractor for the following:

• License numbers (where applicable, i.e. trades)
• A written proposal detailing the following:
  • the work to be done
  • the associated costs
  • timelines
• References

• Above all, certificates of insurance. Be sure to hire an insured contractor to get the job done.

Protip:

Confirm with their insurance company the policy is current and will remain as such for the duration of your contract.

Why is it important to check your contractor’s insurance?

It is imperative that you verify that your contractor or subcontractor carries a commercial general liability policy. Their policy should include the following:

1. Bodily injury liability

This coverage protects your business from financial losses your company may experience should you be sued because of injuries or death caused by your contractor.

2. Property damage insurance

This coverage protects your business from financial losses your company may experience should your business property experience a loss caused by your contractor.

Hiring an uninsured contractor without proper insurance puts your business at risk.

Do not assume the contractor is covered under your commercial insurance policy. Here is a list of why not to hire an uninsured contractor:

• As a business owner, you have less control over contractors than you do for your own employees and therefore increase your likelihood of losses resulting from an uninsured contractor.
• Uninsured contractors will have no way of repaying you for any property damage they cause. This will make your business financially responsible for all damages.
• Uninsured contractors are a danger to your business because they expose you to significant financial risk in the event of an injury on your property.
  • When an accident occurs, both the injured party and all others impacted by the damage will likely pursue legal action to recover their losses.
  • If you knowingly hired an unlicensed and uninsured contractor, and an injury occurs during the contract, your insurance company may have the right not to pay the claim. This may leave you exposed to hefty medical and personal injury bills.
  • This may also damage your ability to purchase insurance in the future.

Always verify contractors insurance before agreeing to hire their services to minimize risk to your business. Contact your BrokerLink broker to discuss your business insurance coverage and how to verify a hired contractor’s insurance.