Dangers of Using Uninsured Contractors
Anytime you work with an unlicensed contractor on your property, you risk losing your investment. To explain, let’s look at the role of a general contractor and the dangers of using uninsured contractors.
You’ve probably have seen a general contractor hand off parts of the job to one or more subcontractors. But what you might not know is that the general contractor bears the overall responsibility for legal compliance, safety, quality of workmanship, and just about everything else that happens on the job site.
So the general contractor holds immense responsibility and liability. For this reason, licensed general contractors carry a lot of insurance to protect the customer against unforeseen risks. A responsible contractor will always carry contractors' liability insurance and workers' compensation insurance, among other policies.
For sub-contractors, they will either have their own liability insurance or they will be operating under the general contractor's license and insurance coverage. All this is to ensure that you as a customer is protected from having to bear the financial consequences of a job gone wrong or workplace injury. This is why it is important to work with a licensed and bonded contractor.
If you use the services of an uninsured or unlicensed contractor, you bear all the responsibility and liability of everything that happens on the site, from injuries to shoddy workmanship and damage to sewer lines. Should a worker get injured, and there’s no workers compensation coverage in place, you’re responsible for their medical expenses and lost wages.
And to make matters worse, your usual homeowners' insurance or landlord liability insurance won’t cover you for these events since the damages are caused by the knowing use of illegal or unlicensed contractors.
The bottom line is you put your investment at a massive risk working with an unlicensed or uninsured contractor. This risk also extends to property management companies who hire unlicensed contractors to do work for the property owner. If something go
es wrong, courts have generally held the property owner liable along with the property manager.
So be wise, only hire licensed and insured contractors.