Hiring a contractor to perform work on your home or condominium can be exciting, but it also carries risk if the proper precautions aren’t taken. Whether you are a homeowner, a condominium unit owner, or a tenant, doing your due diligence before work begins can help prevent costly and stressful situations later on.

We recently encountered a situation that serves as an important reminder of why contractor vetting and insurance verification are so essential.

A Real-World Example

A client planned a renovation to their condominium unit and took what appeared to be the right first step by hiring a project manager to oversee the work and coordinate the necessary trades. Unfortunately, several critical steps were missed:

• The client did not verify the project manager’s work history or references
• No written contract was put in place
• The project manager was paid in cash
• No certificate of insurance was requested from the project manager or the trades they hired

As the project progressed, a plumber hired for the job failed to complete the work properly. This resulted in a plumbing leak that caused significant damage, not only to the client’s unit, but also to the units below.

Why Insurance Matters

When a contractor or trade causes damage and does not carry proper insurance, the financial responsibility may fall back on the homeowner, condo owner, or tenant. In many cases, this means turning to your own insurance policy, potentially leading to:

• A claim on your homeowners or condominium insurance
• Possible increases in future premiums
• Coverage limitations or disputes if negligence is involved

If the contractor had been properly insured, their commercial general liability insurance would typically respond to the damage, protecting you and keeping your own insurance policy out of the claim.

Key Steps to Protect Yourself

Before hiring any contractor, project manager, or trade, always take the following steps:

• Verify their experience and references: Ask to see examples of prior work and speak to past clients
• Get everything in writing: A clear contract protects both parties and outlines responsibilities
• Request a Certificate of Insurance: This confirms the contractor has valid liability coverage in place
• Ensure all trades are insured: Subcontractors should carry their own insurance, not rely on someone else’s
• Avoid cash payments: Use traceable payment methods for accountability

These steps apply equally whether you own a detached home, a condominium unit, or are a tenant arranging work with a landlord’s permission.

The Bottom Line

Hiring the right professionals, and confirming they are properly insured, can make the difference between a smooth renovation and a costly insurance claim. A certificate of insurance is not just paperwork; it is your assurance that if something goes wrong, the contractor’s insurance responds, not yours.

If you have questions about contractor insurance requirements or how claims may impact your policy, we are always happy to help.