The Dangers of Mixing Contractors and Home Insurance

Winter’s right around the corner. That means it’s time to shore up the roof, patch up the walls and make sure your flooring and foundation are ready for the damp winter weather. Unless you’re great with your hands and doing all your own repairs, that means there’s a good chance that somewhere along the way you’re going to have to break down and hire a contractor to get the job done before the snow and rain make it all but impossible. And that means that somewhere, somehow, you’re going to have to figure out how to balance your contractor and your home insurance.

Before we get into the juggling process, let’s talk about why it matters. See, when you’re a home insurance provider it’s all about relative risk. Clients who are a bigger risk are going to have higher home insurance rates. Clients who are a lower risk (i. e. those that live at home, in rural areas, inside Ft. Knox) are going to have much lower home insurance rates.

Now, let’s talk about clients that are ripping up floors, tearing down walls and randomly replacing pipes and electrical wires?on second thought, let’s not. It’s pretty easy to see where your home insurance provider would have a few concerns!

Houses that become contractor’s playthings are at a high risk for damages due to the building process. Fire, flood, wind, you name it, they’re exposed to it. And damages caused by contractors, or anytime during the renovation process, may not be covered as a part of your standard home insurance policy.

Leaving you holding the bill.

If you know you’re going to be calling in a contractor to give your home a face lift, you should start by looking around for a certified one with his (or her) own insurance. That way if their crew makes a mistake and it does major damage to your home you know you’re going to be covered.

Once you have the contractor’s name, bid and an estimated start/finish date, let your home insurance company know. There are special types of home insurance that can plug the gap while they’re working on your home that will cover damages under both your regular home insurance guidelines and special conditions set down by the company pertaining to the construction process. This is a little more expensive, but not nearly as expensive as having to pay to replace your roof when your insurance company refuses to pay your home insurance claims.

As soon as the building process is done your coverage reverts back to your regular policy, and everyone walks away happy!