Should You Get Contractor Insurance for Big Home Projects?

Planning a major home renovation? Whether you’re remodeling your kitchen, adding a new deck, or replacing your roof, one of the most overlooked but critical steps is making sure your contractor is properly insured.

Contractor insurance doesn’t just protect the person doing the work it also protects you, the homeowner. If something goes wrong on your property, and your contractor doesn’t have the right coverage, you could be left footing the bill.

Here’s what you need to know before letting anyone start work on your home.

Why Contractor Insurance Matters for Homeowners

When you hire someone to work on your property, you’re also inviting in a range of risks property damage, injury, faulty work, even lawsuits. Without the right insurance in place, those risks can fall directly on your shoulders.

Here’s what proper contractor insurance does:

Protects against accidents, like a worker falling off a ladder
Covers property damage, such as breaking a water pipe or damaging walls
Helps resolve disputes if work is left unfinished or done poorly
Keeps claims off your homeowners insurance, which could raise your premium

Real scenario: A roofer drops a heavy tool through a skylight, damaging your interior. If they’re uninsured, you might have to file a claim on your policy — or pay out-of-pocket.

The Two Must-Have Policies: General Liability & Workers’ Comp

Not all insurance is created equal. There are two types of policies every reputable contractor should carry:

1. General Liability Insurance

This covers:

Damage to your property caused by the contractor or their crew
Injuries to others (non-employees) on your property due to the work
Legal fees if they’re sued due to an incident

Minimum recommended coverage: $1 million per occurrence

Example: A contractor accidentally knocks over a can of paint onto your hardwood floor. General liability should cover the cleanup and replacement costs.

2. Workers’ Compensation Insurance

This covers:

Medical bills and lost wages for injured workers
Liability protection if the worker sues the homeowner for unsafe conditions

Important: If your contractor doesn’t carry workers’ comp, and one of their workers gets hurt, you could be held responsible — especially if you’re considered the “jobsite owner.”

How to Verify Contractor Insurance (Don’t Skip This)

Never take a contractor’s word for it. Always ask for proof of insurance before they start work.

Here’s how to do it right:

Request a Certificate of Insurance (COI): This is a one-page document that summarizes the contractor’s coverage. It should be issued by their insurance company — not created by the contractor.
Check that you’re listed as a “certificate holder”: This ensures you’ll be notified if the policy is canceled or changed.
Confirm coverage dates: Make sure the insurance is active and will remain so for the duration of your project.
Call the insurer: A quick call to the provider listed on the COI can confirm it’s legit and current.

Tip: If the contractor hesitates or gives excuses, that’s a red flag.

Other Key Coverages to Look For

While general liability and workers’ comp are the basics, some projects may require more specialized protection:

Builder’s Risk Insurance

Covers materials and equipment on-site during construction
Protects against theft, vandalism, and weather damage
Sometimes purchased by the homeowner, sometimes by the contractor

Professional Liability (Errors & Omissions)

For contractors doing design or consulting work
Covers claims from faulty plans or poor recommendations

Auto Insurance (for Company Vehicles)

If a contractor damages your property while parking a company truck, commercial auto insurance kicks in

Red Flags That a Contractor May Be Uninsured

Uninsured or underinsured contractors are more common than you’d think especially in high-demand markets. Watch out for these warning signs:

They resist providing a Certificate of Insurance
The COI lists expired coverage or suspicious gaps
They ask you to pull permits yourself
Their quote is drastically cheaper than others
They insist on cash payments only
They say, “Don’t worry, I’ve never had a problem”

Cutting corners on insurance usually means cutting corners on quality, too.

What If They Say They’re “Self-Insured”?

Some contractors claim they’re self-insured, meaning they’ll pay out-of-pocket if something goes wrong. Sounds reassuring, but in reality, it’s risky.

Without formal coverage:

There’s no guarantee you’ll be paid if they damage your property
You may end up suing them to recover costs with no assurance they have the money
It complicates any liability or injury claim

Always insist on formal, verifiable insurance.

Should You Get Extra Protection?

Even if your contractor is insured, consider talking to your own home insurer before starting major work. You may want:

A policy rider or temporary increase in coverage
Builder’s risk or renovation endorsements
Higher liability limits during the construction period

It’s also smart to document the condition of your home before work begins photos, videos, inventory to help with any disputes later.

Final Word: Insurance Isn’t Optional It’s Essential

Contractor insurance isn’t just paperwork it’s your financial safety net. One mistake by an uninsured contractor can turn a dream renovation into a legal nightmare.

Always:

Ask for proof
Read the fine print
Walk away if they won’t cooperate

When you protect yourself up front, you avoid messy surprises down the road.

Next read: What to Do If a Contractor Damages Your Home (Insurance Steps)

Accidents happen even with insured contractors. Learn how to file a claim, document damage, and protect your rights if your home is impacted.