Contractor Insurance And Risk Management Blog » Homeowner

Do Homeowners Building Own Home Need Workers’ Compensation?

admin — Thu, 22 Sep 2011 13:47:45 +0000

According to a panel of experts of Independent Insurance Agents & Brokers Association, the answer is that it depends on a number of factors.

Some states exempt homeowners building their own home from the requirement to carry Workers Compensation by statute, case law, or regulatory ruling. You may want to visit www.workerscompensation.com for a summary of such laws.

If your state does have an exemption, you may be able to rely on your Homeowners Liability to some extent. If Workers Compensation is not in play, the remedy for the injured worker is a direct lawsuits against the homeowner under negligence theory. Most Homeowners Liability forms will respond to negligence lawsuits from injured workers if there is no Work Comp in force or “if not required by law to be provided”. However, many carry minimum limits such as $100,000 which certainly won’t be enough for serious injuries such as falls off of roof. At a minimum, $300,000 should be carried and a $1,000,000 Personal Umbrella policy should be carried in addition.

It is certainly safer to carry Workers’ Compensation. However, the premiums can be very expensive unless a certificate of insurance evidencing Workers’ Compensation is collected from all subs. Or better yet, just hire a qualified General Contractor to build the home and carry the Workers’ Compensation.

This blog does not address the equally serious issue of whether General Liability insurance should be carried by the homeowner building his/her own home. This topic has been addressed in other blog postings.

Source: Building Your Own Home…Insurance Implications, Independent Insurance Agents & Brokers Association

Should Builders Risk Be Placed By The Owner?

admin — Thu, 01 Jul 2010 14:27:09 +0000

We are routinely asked by our builder clients if we believe it’s ok to have the homeowner purchase and carry the Builders Risk coverage. The following are some points to ponder:

Are your materials covered while in transit and temporary storage? If so, how much?
How are you going to insure your business profit and overhead on the job?
Where you going to obtain coverages for your scaffolding and construction forms?
Can you be certain the coverage is actually in force?
Will the policy cover collapse or theft of building materials before they are permanently attached?

The answers to the above questions are probably going to be unfavorable. This is why we recommend that our builder clients carry the Builders Risk policy instead of allowing the homeowner to set it up.

Source: Jon Fritinger/Great American Insurance and Sadler & Company, Inc.

Homeowner’s Policy Didn’t Cover Chinese Drywall Damage

admin — Thu, 01 Jul 2010 14:15:02 +0000

A federal judge has ruled that a homeowner’s insurance policy does not have to pay for damages caused by faulty Chinese drywall. With Chinese drywall continuing to be a concern for homeowners, the judge’s ruling could affect how thousands of lawsuits by homeowners will be settled.

The judge based his decision on the exclusion within the homeowner’s policy which excludes damage caused by latent defect, faulty materials, corrosion, and pollution. With this exclusion, the policy would not cover removing or replacing the faulty drywall or any subsequent damages.

Needless to say this decision sets an unfavorable precedent for homeowners.

Source: Insurance Journal