Build Your Own House

Contractors Insurance

Summary: Any contractor or subcontractor you hire must have contractors insurance whether you are building a new home, remodeling a home, or building an addition.

Carl, I want to build an addition. The man I want hire is now a foreman who used to have his own building company, but now is just overseeing things for another contractor and does not have contractor insurance.

What do you think?


Hi Sun,

One of the cardinal rules of being a General Contractor is:

Whether you are hiring contractors or subcontractors for building a new home, remodeling a home, building an addition, or just hiring someone to do some kind of general labor on your property be absolutely sure that they are insured.

Any contractor, subcontractor, or anyone you hire to do anything on your property needs to be insured for both general liability insurance and workman’s compensation insurance.

Anyone you hire to do anything needs to be insured BEFORE they set foot on your property.

Certificate of Insurance (For a larger sample in a PDF file, click here)

They must provide you with a copy of their Certificate of Insurance. This Certificate provides proof that the person or company named on the Certificate has General Liability insurance coverage, and carries Workmans compensation insurance, also called workmens comp insurance, for his or their employees.

These commercial policies are paid in advance for a whole year, and can’t be canceled. So, check the dates on the certificate.

Also, remember: In every case, you are technically the builder or general contractor, and you will get the job done by contracting or subcontracting with contractors.

A subcontractor, or sub, is an individual or a firm that contracts to perform part or all of another contract (specific job).

(For example: If I am a plumbing contractor and I contract for a plumbing job with a General Contractor, I am a subcontractor on that job.)

You will pay for the project by setting a predetermined contract amount with each contractor or subcontractor. This is important. You will have no hourly wage employees working for you, which means you will avoid all of the governmental red tape and taxes concerning employees.

Your contractors and subcontractors are NOT considered to be employees.

And finally: If a contractor, subcontractor, or one of their workers is injured on the job on your property and they are not insured, they can come after you for money. Yikes!

Carl Heldmann