“The term “fully-insured” must mean that the contractor carries all of the necessary insurance to provide me with adequate protection.”
Surprisingly, this is not always the case!
Contractors are required to carry a minimum of two insurances; Worker’s Compensation insurance (if he hires one or more employees or assistants) and Contractor’s Liability insurance.
Worker’s Compensation covers you if a person that is working on your property is injured. Liability insurance covers mostly property related things like a broken window or damage to your personal property by the contractor. Personal injuries are by far your greatest potential exposure in most cases.
While both types of insurance have become very expensive in recent years, of the two, Worker’s
Compensation insurance is considerably more expensive – up to four to five times as much as Liability insurance.
Many contractors illegally avoid paying for the more expensive Worker’s Compensation insurance by claiming they don’t actually need it due to the fact that they “technically” don’t have any employees.
If the contractor “really” only works by himself he may need just the Liability insurance. But if he hires anyone to assist him and doesn’t have a Worker’s Compensation policy in place you may be dangerously exposed should that hired hand get hurt while working on your home. Most jobs require more than one person to complete them. Therefore you almost always need this protection.
In most cases, your homeowner’s policy only covers injuries incurred by people considered to be casual labor like a maid or gardener. It’s a whole different story when it comes to hired contractors. To be safe, stick to those contractors who carry both policies. And remember, “Fully Insured” doesn’t always mean what it implies. To verify that a contractor has both Liability and Worker’s Compensation insurance, ask for the name and phone number of the carrier so that you can call to verify if a particular contractor is adequately covered. At the very least, ask for certificates of insurance before you sign a contract.