We Damaged the Homeowner’s Property During Remodel: How Our Insurance Paid $25k
The Pipe We Didn’t See
My small remodeling company was renovating a master bathroom. While moving a wall, my employee accidentally nicked a water pipe hidden behind it. That night, a slow leak started. By morning, it had flooded the bathroom and ruined the brand-new hardwood floors in the master bedroom below. The damage was over $25,000. I was devastated. But our Commercial General Liability (CGL) policy covered it. It paid for all the repairs, protecting my client’s home and saving my young business from a single, costly mistake.
Insuring Your Residential Contracting Business: Protecting You and Your Clients
The Promise Behind Your Hammer
When you walk into a client’s home, you’re making a promise to improve it. But what if something goes wrong? What if you drop a tool and shatter their expensive tile floor? What if an employee falls off a ladder? Your insurance is the financial backing for your promise. It tells the homeowner that if you make a mistake, you have the resources of a multi-billion-dollar insurance company on hand to make it right. It’s what separates a professional contractor from just a guy with a truck.
Residential Contractor Needs: CGL, Workers Comp, Tools/Equipment Coverage
The Three-Part Shield for Your Business
As a residential contractor, you need a three-part shield. The first part is General Liability (CGL), for when you accidentally damage a client’s property. The second is Workers’ Comp, which is non-negotiable if you have even one employee, for when they get injured on the job. The third, often overlooked, is Inland Marine insurance, which protects your expensive tools and equipment whether they’re in your truck, at your shop, or on the job site. Without all three, your business is dangerously exposed.
Liability Risks Inside Someone’s Home: Property Damage, Client Injury
The Ladder and the Grand Piano
My remodeling crew was painting a two-story foyer. The homeowner was home and walked under the ladder right as my employee accidentally dropped a paint scraper. The scraper missed her but gouged the lid of her antique grand piano, a family heirloom. The repair cost was $4,000. Our General Liability policy covered the damage. It was a stressful reminder that when you’re working inside someone’s personal space, surrounded by their life and their belongings, the risk of an expensive accident is incredibly high.
Completed Operations: What if Your Work Fails Months Later (Leaky Roof, Faulty Wiring)?
The Fire That Started After We Left
My electrical contracting company rewired an entire house. Six months after the job was complete and we were paid, faulty wiring in one of our new outlets overheated and started a fire in the bedroom wall. The damage was extensive. My standard liability policy wouldn’t have covered it because we weren’t working there anymore. Luckily, my policy included “Completed Operations” coverage. This crucial extension protects you from liability for damage or injury that happens after you’ve finished the job, covering your work long after you’re gone.
Workers’ Comp If You Have Employees (Even One!) – Don’t Skimp!
The “Friend” Who Became a Million-Dollar Claim
A small contractor hired his friend, a carpenter, to help him on a deck project. He paid him as a “subcontractor” to avoid paying for workers’ comp. The friend fell from the second story and was paralyzed. Because the contractor had misclassified him, the courts ruled he was an employee. The contractor was now personally on the hook for over $1 million in medical bills and lost wages. It was a catastrophic, business-ending mistake. If you have employees, you must have workers’ comp. It is not optional.
Protecting Your Valuable Tools and Equipment from Theft or Damage
The Morning My Truck Was Empty
I showed up to a job site one morning, looked in the back of my work truck, and my heart sank. Someone had cut the lock overnight and stolen over $8,000 worth of my crew’s power tools—saws, drills, the works. My commercial auto policy didn’t cover the contents. My general liability policy didn’t cover my own property. The only thing that saved me was my Inland Marine tool and equipment policy. It cut me a check so I could go buy new tools and get my crew back to work.
Comparing Insurance Quotes Tailored for Residential Remodelers vs. New Builds
Remodeling Carries More Risk
A remodeler and a new-home builder were comparing insurance quotes. The remodeler’s premium was 30% higher, and he was confused why. The insurance agent explained, “The new-home builder works on an empty lot. You, the remodeler, work inside someone’s finished home, around their family, their furniture, and their pets. You have a much higher risk of damaging existing property or injuring a third party.” The higher premium directly reflected the increased liability of working in and around a client’s personal space.
Does Your CGL Cover Damage to the Specific Part You’re Working On? Check Exclusions!
The Exclusion That Cost Me My Profit
I was hired to replace a leaky shower pan. In the process, my employee damaged the new pan we were installing. I figured our General Liability policy would cover the $2,000 replacement cost. I was wrong. The policy had a “your work” exclusion, meaning it wouldn’t pay to fix the specific thing I was contracted to work on (the pan). It would have paid for water damage to the floor below, but not for my own faulty work. It was a hard lesson in reading the fine print.
Filing a Claim When a Homeowner Alleges Faulty Workmanship Caused Damage
The Leaky Window and the Ruined Floor
We installed new windows in a client’s home. A year later, during a huge storm, one of the windows leaked, ruining a large section of their new hardwood floor. The client claimed our faulty installation was the cause. We filed a claim with our General Liability insurer. They hired an engineer who determined the leak was actually from a separate roofing issue, not our window. The insurer denied the claim but paid the engineering and legal fees to prove we weren’t at fault, saving us from a baseless accusation.
My Kitchen Remodel Contractor Showed Me His Insurance Certificate (Good Sign!)
The First Thing I Asked For
When we were getting bids for our kitchen remodel, the first thing I asked each contractor for was their certificate of insurance. Two of them emailed it to me within the hour, showing they had both liability and workers’ compensation coverage. The third guy hesitated and said he’d “get it to me.” We hired one of the first two. A contractor who is professional about their insurance is likely to be professional about their work. It’s the easiest way to spot a pro.
Managing Subcontractor Insurance Certificates (Even for Small Residential Jobs)
The Uninsured Plumber Who Cost Me a Fortune
I hired a solo plumber I knew for a small bathroom job. I trusted him, so I didn’t bother getting his certificate of insurance. While soldering a pipe, he accidentally started a fire inside the wall. The damage was $40,000. It turned out his insurance had lapsed. Because he was my sub, the homeowner sued me. My insurance policy had to respond, but my rates skyrocketed for years. I will never, ever let anyone work on my job site again without first seeing proof of their insurance.
Protecting Your Reputation and Business from Homeowner Lawsuits
Your Shield Against “He Said, She Said”
You can be the best contractor in the world and still get sued. A homeowner might have unrealistic expectations, or they might be looking for a way to get a discount. When a client files a lawsuit, your General Liability insurance is what stands between that claim and your business’s bank account. It doesn’t just pay for your mistakes; it pays the expensive legal fees to defend your reputation when you’ve done nothing wrong. It’s your professional shield against the world of “he said, she said.”
Pollution Exclusion Concerns for Painters, Insulation Contractors?
The Fumes That Became a Lawsuit
My painting company was hired to refinish a large deck. We used an industrial-strength sealant. The neighbor, whose property was close by, later claimed the fumes from the sealant had contaminated her prize-winning rose garden and made her family sick. She sued us for cleanup and medical costs. Our standard General Liability policy had a pollution exclusion and wouldn’t cover the claim. We learned we needed a special, separate Pollution Liability policy to cover risks from the materials we use every day.
Residential Contractor Insurance: Essential for Working On People’s Homes
Your License to Enter
A contractor’s license lets you build, but your insurance is what gives you the right to walk into someone’s home. It’s your promise to them that you respect their property and their safety. It’s the guarantee that if your work leads to an accident, a team of professionals with deep financial pockets will be there to make it right. In residential construction, where you are literally working in the center of a family’s life, a robust insurance policy is the ultimate sign of respect and professionalism.