Insurance and Workers' Compensation
What happens if a contractor you hired accidentally damages your property, or the property of your neighbour? What if construction work on your property causes an injury?
In situations like these, the actions of your contractor could end up costing you money. That’s why you should work only with contractors who have adequate business insurance covering public liability and property damage. Ask for a Certificate of Insurance — proof that coverage is in place — as part of your contract.
You also need to consider your own Homeowners’ Insurance coverage when beginning a renovation project. In the event that your home is damaged, or damage is caused to a neighbouring property, your own insurance also needs to protect you.
Many people assume their homeowners’ insurance covers circumstances like these – and in many cases it does. But homeowners’ insurance policies vary widely in terms of coverage; some are comprehensive, but others cover only a certain number of "specified perils," and exclude everything else.
Before starting any work on your home, contact your home insurance broker or agent. Explain the work you plan to have done, who will be doing it, and ask if your present insurance policy provides adequate coverage. If it doesn’t, update your policy. You need adequate insurance even though your contractor is fully insured.
Workers' Compensation is a government program that provides workers injured on the job with financial support and, if required, pays for their rehabilitation. Workers' Compensation programs operate provincially, and enrolment is mandatory for most workers and employers. Homeowners usually don’t have to think about Workers' Compensation, which is the responsibility of the contractor they hire.
However, if your contractor is not complying with Workers' Compensation rules, you may face a financial risk - especially if you do not have a written contract that establishes that the contractor is an independent business, rather than being employed directly by you.
For example, in many provinces if a homeowner hires a contractor for cash "under the table" and the contractor is not enrolled in Workers' Compensation, the homeowner can be held financially responsible if a worker is hurt on their property.
How do you remove this risk? Ask your contractor for a Letter of Clearance from your province's Workers' Compensation program. If your province allows exemptions for self-employed workers, ask for a letter from the program stating that the contractor has been exempted.
If you hire a contractor who is not required to have Workers' Compensation coverage, find out if your own homeowners’ policy protects you against a personal injury lawsuit. If not, consider increasing your coverage.
For more information, it is always a good idea to contact your provincial Workers’ Compensation program.