Do contractors need insurance?

Full explanation

Two coverages matter to you as the property owner.

General liability insurance pays for property damage and injury to other people caused by the contractor''s work — a burst pipe, a fire, a damaged neighbouring wall. Without it, your own homeowner''s policy and your own assets are the fallback.

Workers'' compensation covers injuries to the contractor''s workers. This is the coverage homeowners most often overlook, and the one with the most exposure: if an uninsured worker is hurt on your property, the claim can land on you.

Requirements vary by state, by trade and by whether the contractor has employees. Sole proprietors with no employees are exempt from workers'' compensation in many states, and some contractors file an exemption. That is legal — but it means no coverage exists, so ask what happens if that person is injured.

How to verify coverage:
- Ask for a certificate of insurance (COI) sent directly by the insurance agent, not a PDF forwarded by the contractor.
- Check the policy dates cover your entire project.
- Check the named insured matches the company on your contract.
- Ask to be listed as a certificate holder so you are notified if the policy cancels.

State-specific rules

Florida''s Division of Workers'' Compensation applies a stricter threshold to construction: construction industry employers with one or more employees generally must carry workers'' compensation coverage, compared with four or more employees in most non-construction industries. Corporate officers and certain owners may hold a state-issued exemption.

Florida also requires proof of general liability and (where applicable) workers'' compensation coverage or an exemption when a contractor is licensed through DBPR. Verify current coverage yourself — licensing status and insurance status are tracked separately and coverage can lapse after a license is issued.

Common mistake to avoid

An insurance certificate can be valid on the day it was issued and cancelled the week after. Confirm the policy period covers your project dates, and ask to be added as a certificate holder.

Sources & References

• Coverage Requirements — Florida Department of Financial Services, Division of Workers' Compensation official source
• Construction Industry Licensing Board — Florida Department of Business and Professional Regulation official source
• How To Avoid a Home Improvement Scam — Federal Trade Commission official source

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Related questions

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