When the weather turns warmer and summer arrives, homeowners naturally begin thinking of home improvements … an extra bedroom, a two-car garage, and a sunroom. But a big dream can become an exhausting nightmare if you do not do your homework first.  Before you allow anyone onto your property or hire someone to hammer a nail, the smartest advice an insurance agent can tell you is, take the time to do some preliminary investigating.

A good friend began a major renovation on a historic home. He hired a contractor based on a referral and began discussing the scope of the project.  One element that was included in the restoration was the replacement of the homes multitude of custom windows.

Eighteen semi-custom Kolbe windows were ordered for the home at a price of almost $30,000. At the end of the contractor’s workday, the supplier arrived  to deliver the windows. One of the workers on the job site, instructed the deliveryman to stack the windows on the side of the house until the next day.  That evening a thunderstorm moved through and a limb from an 80-foot Oak tree came crashing down on the windows, destroying them all.

 Who is responsible for the cost and replacement of the windows?

  • The Contractor whose employee had directed the windows be stored on the side of the building?
  • The Supplier for leaving them in an unprotected area?
  •  Or the homeowner who owned the tree?

These are the types of situations that occur occasionally when undertaking a home improvement, but homeowners usually do not prepare for. They hire a contractor and often assume that the contractor has sole responsibility and liability on all aspects of the job. Laws vary from State to State and county-to-county and insurance requirements also vary.

So here is some points on what you need to look for upfront, before hiring anyone to work on your premises:

  • Is the contractor licensed and registered in the State? Many counties/states  such as Rockland and Westchester counties  require contractors, electricians and plumbers to be licensed, some counties/states do not. You should check the status of any business that you hire with the N.Y or N.J. Department of State. (Consumer Protection) http://www.dos.ny.gov
  • Does the contractor  have a good solid reputation? Check with the Better Business Bureau about any complaints. Ask the contractor  for 4- 5 references and follow up with those former clients. Did he show up when he was scheduled to work? Did he complete the job when promised? Where there unexpected costs incurred that you did not plan? Did he clean the property and return it to the condition it was prior to the job? There are many questions that need to be asked upfront.
  • Does the contractor carry all the proper insurance policies? What additional insurance should I look into from my insurance agency? What am I responsible for? What is he responsible for? What if building materials “walk off” from the job site? What if one of his workers is injured on my property? What if he unintentionally damages my property or community property such as a gas-line? Builder’s Risk (including Installation Coverage), General Liability and Workers Compensation are basic insurance policies that all Builder’s should have before you hire them. You should inform your insurance company of the project, so that they can look for any “gaps” or “red-flags” in your Homeowners Policy too.  One problem that homeowners can encounter is that they can mistakenly take on their own liability with building renovations by managing the project themselves (in essence, they become their “own contractor”.) This is why it is vitally important to discuss these issues with your insurance agent and the contractor first.
  •  No work should begin until a contract is in place. Every project, no matter how small, should have a contract that is agreed upon and signed by both parties and reviewed by your lawyer. All details of the project should be mapped out and listed in the contract so that you have legal recourse in case of dispute. 

In the case of the story about the damaged windows, the contractor felt that the homeowner had responsibility because the damage occurred when he was not on the job. The homeowner felt the contractor had responsibility because he had the materials placed on the side of the house. If the contractor had business insurance that included “Instillation Coverage of materials, attached, unattached or in transit” this situation would not be an issue. The damages would have been covered by his insurance policy. But he did not. In the end, the contractor ended up "eating the cost" of the windows.

Home renovations and restorations are a major job and a huge undertaking. It is already very stressful to have someone dismantling your home and interfering with your everyday life. Your home is your refuge. You want the job done professionally, accurately, quickly, within budget and without incident. Take the time upfront to do your homework concerning who you are hiring and what they are bringing to the table. Proper business insurance is a must for a contractor. In the end asking he right questions  it will save you hours of aggravation and regret.