How to verify a contractor's insurance — and why it protects you
This article is for educational purposes only and is not a substitute for professional advice. Local codes, regulations, and best practices vary by region.
A contractor with liability insurance protects you. If someone is injured on your property or the contractor damages something, insurance covers it. A contractor without insurance means you’re liable for injuries or damage.
Verifying insurance is simple but often skipped. It’s critical.
Why Insurance Matters
If a contractor is injured on your property and has no workers’ compensation insurance, you might be liable for medical bills and lost wages. That’s expensive.
If a contractor damages your home (accidentally breaks a wall, damages landscaping) and has no liability insurance, they pay nothing and you eat the cost.
If a contractor’s work causes injury (poorly installed electrical that causes a fire) and they have no insurance, you’re exposed.
Liability insurance protects both of you. It ensures someone pays if something goes wrong.
Types of Insurance
General liability insurance covers damage the contractor causes (breaking your window, damaging your landscaping). This is standard.
Workers’ compensation insurance is for the contractor’s employees. It covers injuries to workers. If the contractor has employees, this is legally required in most states.
Professional liability insurance (errors and omissions) covers the contractor’s mistakes. This is less common for general contractors but might apply to designers or specialists.
Vehicle insurance is separate but relevant if the contractor uses a vehicle for work.
Verification Process
Ask the contractor for proof of insurance. They should provide a certificate of insurance.
A certificate shows the insurance company, policy number, coverage type, coverage limits, and expiration date.
Verify the certificate independently by calling the insurance company. Don’t just rely on the certificate the contractor provides.
Ask for the certificate to name you (the homeowner) as an “additional insured.” This provides you with direct coverage.
What You’re Looking For
Liability coverage of at least $1 million is standard. Less than that is insufficient.
Active coverage (not expired). A certificate from last year isn’t current.
Coverage that extends through the entire project timeline.
A statement that the homeowner is an additional insured.
Red Flags
A contractor who can’t provide proof of insurance immediately is a problem.
A certificate that’s expired or about to expire is concerning.
A contractor who claims they’re “insured” but can’t produce proof. Don’t take their word for it.
A certificate that won’t verify when you call the insurance company. Fake certificates exist.
When the Contractor Is Uninsured
An uninsured contractor is higher risk. You have no protection if something goes wrong.
Some states allow uninsured contractors if you sign an explicit waiver. This makes you responsible.
Don’t hire an uninsured contractor unless the project is tiny (a few hundred dollars) and you’re comfortable absorbing risk.
Bonding Separate from Insurance
Some contractors offer bonding, which is different from insurance. A bond guarantees the contractor will complete the work or repay you if they don’t.
A contractor with a bond is generally more reliable than one without.
A bond is often required for licensed contractors.
The Cost
Contractor insurance is a cost the contractor factors into their bid. You’re not paying extra for it; they’ve already included it in their price.
An uninsured contractor might be cheaper because they don’t carry insurance. But that’s a false saving if something goes wrong.
Your Responsibility
Verify before signing a contract.
Have them add you as additional insured.
Confirm coverage extends through the project.
Don’t proceed without proof.
Insurance is non-negotiable. A professional contractor provides it. Period.
© The Whole Home Guide