Contractors Insurance

Blueprints, hard hat, level and calculator.

Contractors insurance (or subcontractors insurance) is your protection against claims made by subcontractors and workmen who may get injured on your job location. If you hire a general contractor to build your log home you must ensure that they carry contractor’s insurance that indemnifies you against any liability or injury claims for accidents that may happen on the job.

Liability and Workman’s Comp

But ensuring that your general contractor has his insurance in order is only part of the job. You must make sure that any subcontractors that are working on your cabin also have both general liability insurance and workman’s compensation insurance. This also applies if you are hiring a subcontractor directly to build, remodel or do any kind of general labor, like log cabin maintenance.

They must have subcontractor’s insurance and prove it to you by showing you their Certificate of Insurance before they ever set foot on your property to begin work. If not, they can come after you in court for any damages or injuries sustained on your property, even if it’s their own fault.

You should be sure to keep a copy of their Certificate of Insurance. If they don’t email you a copy you can always snap a picture of it using your phone so you have a permanent record. A Certificate of Insurance is prepaid for a year, so if a subcontractor shows you a certificate with a valid date you can be assured that it is valid and cannot be withdrawn.

Here is a sample Certificate of Insurance:

Example of contractors insurance contract.

Two Ways to Protect Yourself from Liability

  1. Before you pay any subcontractor or contractor to begin a job, you should request a copy of a current Certificate of Insurance with a valid date.
  2. You can also include a clause in the contractor agreement naming you as an “additional insured” party and requiring written notification from the insurance provider of any policy cancellations.

Contractors Insurance and Bonding

Another protection option is called bonding. You often see written on the side of contractor’s trucks: Licensed, Bonded, Insured. Bonding is when a contractor pays a set amount of money (called a “surety bond”) to a bonding company. The bonding company then guarantees that they will cover lawsuits and legal fees up to the limits of the bond. This can be tricky as fees and losses can mount rapidly beyond the bond limits.

Hold Harmless Agreement

A subcontractor agreement with the general contractor verifies that the subcontractor is providing general liability insurance as well as workman’s compensation insurance. This is often referred to as a “Hold Harmless Agreement” since it indemnifies the general contractor against claims. This also generally includes warranty and arbitration clauses.

Especially if you're acting as your own general contractor, before the job has been started it is your responsibility to make sure that all workers involved are covered by contractors insurance --  liability insurance and workman’s compensation insurance -- so that you don’t get stuck with the bill if any accident occurs on your log home project or property.

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