Am I Protected When Someone Works On My Home

I’m worried about people who do work on my home. I was told to never allow people to do work on your property that are not covered by Workers Compensation. I was told this by an IRS representative at a meeting.

It is almost impossible to get someone who is covered. Every one is considered an “independent contractor” so they are not covered by the owner of the business. This category of independent contractor is abused by business owners and used to not pay taxes and avoid liability. The person is clearly not an independent contractor by the definition on the IRS website. Where does that leave the home owner?

We have had that problem with painters, window installers, yard maintenance people, tree removal people. The tree removal people even had it in their contract that they are not responsible for any damage done to our property or to their workers.  Your hands are really tied.  No one is considered an employee with the rights of employees.  One person I spoke to (installing our new windows) told me that he does not even carry private health insurance — he is just not willing to pay for it.

I considered having everyone sign something saying that we are not liable for them when they work on our property and that that they are expected to be covered by personal insurance or Workers Comp. My lawyer said that it would probably not hold up in court. My lawyer also said that she is finding a few homeowner policies that specify that they will not pay for anyone working on your property who is not covered by Workers Comp.

So what is a homeowner to do to protect themselves? I am sure most people are not even aware of this problem until someone is injured. The IRS is not enforcing their rules. Business owners are irresponsible and cheap. This is a real potential problem for people that they are not even aware of.

This is a great question. First of all, your issue has nothing to do with the IRS from your standpoint. If people who work on your house aren’t paying proper taxes, that’s not your problem.

However, a homeowner can encounter huge problems if people working on their house don’t have proper insurance and other coverage.

You should make sure any contractor you hire carries both commercial general liability and workers’ compensation insurance, according to the Ohio Insurance Institute. You should ask for the contractor’s certificates of both their liability and workers’ compensation insurance before you sign a contract. A certificate of insurance is a summary provided by the contractor’s insurance company showing the policy numbers, the coverages that are in place and the time period covered

And because an employer/employee relationship requires Workers Comp coverage, there may not be coverage under a homeowner’s insurance policy.

In the case of a subcontractor who is working for another company and that subcontractor is hurt at your home, the general contractor is likely liable. In a true subcontractor relationship, the general contractor would require the sub to have commercial general liability coverage and Workers Comp before allowing them on a job site, Bonelli said. So the general contractor would likely be responsible for the sub if injured on the job, not the homeowner.

So what should a homeowner do? You should ask for his Certificate of Liability Insurance and Workers Comp documentation. These are the two important coverages that protect you as the homeowner and the contractor as well. Separately, it’s  a good idea to check with your local city/community to see whether a contractor is bonded locally.

Granite Risk Advisors is your trusted insurance advisor. As an independent firm we have access to multiple insurance carriers allowing us to compare coverage and rates to better deliver the best possible value for our clients. We are based in Georgia and serve clients nationwide. We are ready to assist you. Call now to speak to a qualified agent. 678-905-0220