Does Homeowners Insurance Cover Damage Caused by a Contractor?

Homeowners often undertake renovation or repair projects, and a common concern arises when a contractor’s work inadvertently causes damage to their property. Understanding how insurance policies respond to such incidents can be complex, as it involves navigating the specifics of both homeowner and contractor coverage. This situation is a frequent point of confusion for property owners, who seek clarity on where responsibility lies and what financial protections are available. The answer is not always straightforward, depending significantly on the nature of the damage and the policies in place.

Homeowners Insurance Coverage

Homeowners insurance policies protect against sudden and accidental damage from named perils like fire, theft, vandalism, and certain weather events. These policies cover the dwelling, other structures, personal belongings, and liability for injuries or damage to others. However, when damage results from a contractor’s work, coverage is often limited.

Standard homeowners insurance policies exclude damage from faulty workmanship, defective materials, or contractor negligence. For instance, if a contractor improperly installs a new roof, and the faulty installation leads to leaks, the cost to repair the roof due to poor workmanship is generally not covered. This exclusion prevents homeowners insurance from acting as a construction quality warranty.

However, “resulting damage” might be covered, even if the initial faulty workmanship is not. If a contractor’s faulty plumbing installation causes a pipe to burst, leading to extensive water damage, the water damage itself might be covered. The cost to repair the initial faulty plumbing connection would still be excluded. Homeowners insurance does not cover correcting contractor errors or wear and tear from poor construction.

Contractor Liability and Insurance

Contractors bear primary responsibility for damage they cause while working on a property, whether due to their actions or negligence. This liability extends to property damage and bodily injury to third parties, including the homeowner. Contractors typically carry specific insurance types to cover such incidents.

General Liability (GL) insurance is the most common policy for homeowners in these situations. It protects the contractor against claims of property damage or bodily injury caused by their operations. If a contractor damages flooring or causes structural harm, their GL policy responds. It covers repair costs, medical expenses, and legal defense if a lawsuit arises.

Beyond General Liability, contractors may have other policies. Workers’ compensation insurance covers medical expenses and lost wages for employees injured on the job. For larger projects, a contractor might secure a surety bond, guaranteeing project completion or homeowner compensation if obligations are not met. The contractor’s GL policy often serves as the primary recourse for homeowners.

Actions to Take After Damage

If damage occurs during a contractor’s project, immediate action is important. Document the damage thoroughly with photographs and videos, capturing its extent and nature. Include detailed notes with the date, time, and how the damage occurred. This documentation establishes a clear record.

Promptly notify the contractor in writing about the damage. This communication should describe the damage, reference the date, and request a resolution plan. Sending this notification via certified mail or email with a read receipt creates a verifiable record. Obtain the contractor’s General Liability insurance policy details, including the insurer’s name and policy number.

File a claim directly with the contractor’s General Liability insurance company. Contact their insurer, provide policy information, and submit your documentation. The contractor’s insurer will assign a claims adjuster. Only involve your homeowners insurance as a secondary measure if the contractor is unresponsive, uninsured, their insurer denies the claim, or if the damage falls under the “resulting damage” scenario where your policy might offer coverage.

Safeguarding Your Project

Taking proactive measures before a project begins can reduce the risk of contractor-caused damage and streamline resolution. Vet contractors thoroughly by checking references and online testimonials. Verify their licensing with relevant state or local regulatory bodies to ensure professional standards.

A comprehensive written contract is essential for any home improvement project. It should detail the scope of work, project timelines, and a clear payment schedule tied to milestones. The contract should include dispute resolution procedures and explicitly require the contractor to maintain adequate insurance coverage.

Homeowners should proactively verify the contractor’s insurance by requesting a Certificate of Insurance (COI) directly from their insurer. Review the COI to confirm policy limits, effective dates, and General Liability coverage for the project type. Adopt smart payment practices, avoiding large upfront payments and tying payments to the satisfactory completion of project stages.