Does Homeowners Insurance Cover Damage Caused by a Contractor?

By the Mercury Team

Whether you’re renovating your fixer-upper house or simply sprucing up your kitchen after watching a remodeling tips video, a contractor will likely be part of your home projects. But what happens if they damage your property on the job? Who’s responsible, and will your insurance cover it? Let’s dive into this topic and review what you should do in this scenario.

Understanding Homeowners Insurance Policies

When it comes to contractor-related situations, it’s important to review your homeowners insurance and figure out what it may or may not cover. Your policy may include these common coverage options:

• Dwelling protection: May help cover the repair or rebuilding costs of your home’s physical structure following a covered loss, such as fire, water damage, smoke, and vandalism.
• Personal property: Helps replace or reimburse your belongings if they become damaged or lost after a covered loss.
• Extended replacement cost: If your home’s rebuilding costs exceed your dwelling protection’s limit, this policy add-on provides additional coverage up to a certain percentage.
• Additional living expenses: If your home becomes uninhabitable due to a covered loss, this coverage helps provide for additional living expenses, such as hotel stays and meals.
• Personal liability protection: If you’re found legally responsible for causing bodily injury or property damage to another party, this coverage can help pay for expenses such as medical bills and repairs.
• Guest medical protection: Helps cover your guest’s medical expenses if they injure themselves on your property.

Who Is Responsible for Damage Caused by a Contractor?

Ideally, the contractor should be responsible for any damage caused to your property. However, certain scenarios may not fall in your favor. Let’s look at some examples:

• If an electrician works on your property and a fire accidentally starts, your homeowners insurance may cover the damage resulting from that fire — up to your policy’s limits. However, your insurance might not cover the costs to fix your electrical system. If you have a home warranty, it may help cover these expenses. For more information, check out our home warranty vs. homeowners insurance blog.
• If a plumber fixes your pipe, but a leak occurs a day later, your homeowners insurance may cover water damage to your floors, furniture, walls, etc. While it likely won’t cover the cost of repairing the pipe, your home warranty might handle this expense.
• If a contractor simply does an inadequate job — e.g., improperly installing roof shingles — but no resulting damage occurs, your homeowners insurance likely won’t cover this poor workmanship. It’s up to you to rectify the situation with the contractor or the company employing the contractor.

What to Do If a Contractor Damages Your Property

If a contractor damages your property, here are some things you can do:

• Contact the contractor: Reach out to the contractor or the company that employs the contractor and ask how they can remedy the situation. If the contractor or company is properly insured, they should fix the issue themselves by working with their insurance provider.
• Go to court: If the contractor denies responsibility or has no insurance, you may consider taking them to court. However, there’s no guarantee a lawsuit will recoup your losses. Plus, lawsuits can be a costly, time-consuming process.
• File a claim: If you want to avoid going to court, filing a claim with your insurance provider would be a quicker, less expensive option. Be sure to provide as much information as possible, such as documentation, contracts, and photos of the damaged property.

What Should I Do If My Contractor Damages My Neighbor’s Property (Or Vice Versa)?

If your contractor damages your neighbor’s property, your contractor must contact their insurance provider to handle the situation. On the other hand, if your neighbor’s contractor damages your property, it’s their responsibility to address the damage.

Preventative Measures

While accidents happen, you can take preventive measures to ensure you hire a reliable contractor. Here’s what you should do:

• Research their previous work: Read reviews, check out photos of their past work, and visit websites like the Better Business Bureau to ensure you hire a reputable contractor.
• Make sure they’re insured: Before beginning your project, verify that your contractor has adequate insurance. If they’re unwilling to give you proof of insurance, consider hiring someone else.
• Verify their license: Hire a licensed contractor to ensure their work is up to code. You can verify their license with the Better Business Bureau or ask the contractor for their license number and verify it with your state’s licensing board.
• Talk with your local agent: Contact your local insurance agent to make sure you understand your coverage. If needed, you can also update your policy and extend coverage to help protect yourself.

Conclusion

While homeowners insurance typically covers accidental property damage, it usually doesn’t cover poor workmanship or the project you hired them for in the first place — e.g., electrical system, plumbing, etc. To ensure you’re adequately protected, review your policy and do extensive research to find an insured, licensed contractor. Looking for new homeowners insurance? Mercury provides best-in-class coverage at an affordable rate.

Contact us today for a fast, free quote!