Home renovation projects are exciting, but they can also lead to accidental property damage. If that happens, you may wonder, “Does homeowners insurance cover damage caused by contractors?” The answer is complicated. It mostly depends on what caused the damage. Let’s explore.
Understanding Homeowners Insurance
As a homeowner, you may need to hire a contractor at some point. For example, you may want to renovate your kitchen to increase your home’s value or make some much-needed repairs to your roof. In either case, trusting a contractor with a home project can be stressful, especially if you haven’t worked with them before.
One way to lessen your stress is by understanding what your homeowners insurance covers in case something goes wrong. Here’s a quick look at the coverages that come with a standard home policy:
- Dwelling – Can pay to repair or rebuild your home if it is damaged by a covered event.
- Other Structures – Can pay to repair or rebuild structures that are detached from your home, including a garage, storage shed or fence.
- Personal Property – Can pay to replace personal items that are damaged or destroyed by a covered event. Examples include TVs, furniture and computers.
- Loss of Use – Can reimburse you for the cost of lodging, meals and other living expenses while your home is being fixed or rebuilt.
- Personal Liability – Can pay for legal costs, medical bills and property damage if a guest in your home injures themselves and you’re found responsible.
- Medical Payments – Can pay for a guest’s medical expenses if they’re injured on your property, no matter who is at fault.
Covered Losses and Exclusions
It’s important to note that a standard home insurance policy only covers your property or belongings if they are damaged by a covered event, such as fire, hail, wind, fallen trees and theft. Covered losses usually involve unexpected or accidental damages that could not have been prevented.
Exclusions, on the other hand, are the events that your policy does not cover. These usually include damage caused by earthquakes, floods, wear and tear, and poor workmanship. To learn which things you’re covered for—and which things you’re not—carefully read your home insurance policy.
Damage Caused by Contractors
Contractors rarely intend to damage your property, but accidents can happen. If this occurs, there’s a limit to what your home policy will cover. It all depends on what caused the damage—was it the result of poor workmanship or an honest mistake?
Who is responsible for damage caused by a contractor?
As mentioned earlier, poor workmanship is not covered by a typical home policy. For example, if a contractor improperly installs roof shingles, homeowners insurance won’t cover the cost to redo the work. In a case like this, it’s up to the contractor to fix the mistake at their expense.
Damage caused by accident, however, may be covered by your home insurance. For example, if a contractor accidentally starts a fire in your home, your insurance carrier could pay to repair the damage up to your policy’s limits, minus your deductible. Afterwards, your carrier may reach out to the contractor’s insurance company for reimbursement; this process is known as subrogation.
For a better idea of what your home insurance may or may not cover, check out these additional examples:
| Damage Caused by Contractor | What Your Policy May Cover | What Your Policy Won’t Cover |
| A plumber does a poor job installing pipes, resulting in a leak | Water damage to your walls, floors and furniture | The cost of reinstalling the pipes |
| An electrician wires a room incorrectly, resulting in a fire | Damage to your home and belongings caused by the fire | The cost to rewire the electrical system in the room |
| A contractor incorrectly installs a built-in shelving unit, causing a shelf to collapse | The cost to repair or replace any items damaged in the fall, such as your TV or stereo | The cost to rebuild the entertainment unit |
| A contractor knocks over a ladder, and it smashes through your sliding glass doors | The cost to replace the damaged doors |
How to Prevent Contractor Damage
The best way to avoid problems on a construction project is to hire a contractor that is licensed and insured. Whether you need a plumber, roofer or electrician, hiring a good contractor can be difficult. Here are some tips:
- Get a referral
- Check reviews
- Ask about years of experience
- Check credentials
- Get a written estimate
- Monitor their work
Get a Referral
Probably the most reliable way to find a contractor is asking someone you trust for a referral. If a friend, neighbor or colleague has had a positive experience with a contractor, that’s a terrific sign. Don’t be afraid to ask other contractors for their recommendations, too. For example, if you need a plumber, ask your electrician if they know someone who is reputable.
Check Reviews
Customer reviews found on the contactor’s website or in their advertisements may be biased. For more objective customer reviews, try conducting a Google search or checking with the Better Business Bureau.
Ask About Years of Experience
You want someone with a lot of experience to work on your home. For instance, a plumber with ten years of experience is more likely to perform quality work than someone with six months of experience.
Check Credentials
Make certain that the contractor has a professional license and carries insurance. While these credentials don’t guarantee performance, licensed and insured contractors are more likely to be reputable.
Get a Written Estimate
Before work begins, get a written estimate from the contractor that breaks down the labor and material costs. You should also confirm the payment plan.
Monitor Their Work
Once work begins, it’s a good idea to discuss any concerns with the contractor right away. A clear and honest conversation is in the interest of both parties.
What to Do If Damage Occurs
Even if you’ve fully researched the contractor, they can still damage your property by accident. If that happens, here are some simple steps that you can take:
