After researching the topic, or typing into Google such questions as "Why should I hire a company with General Liability Insurance" or "who cares if the company I hire has Workers Compensation Insurance", I get nothing but sites or posts targeted towards businesses trying to sell insurance. It seems that there is a minimal amount of information out there explaining exactly why this will benefit the customer or the homeowner and why they should pay a premium or even care if the company they hire is properly insured. This article is written from the perspective of the homeowner or customer - the person hiring a company to do work for them at their residence or business.
Well here is the answer and here is why it is important:
Let us imagine a classic example of getting a new roof put on your home. This is an expensive endeavor and let’s say you get a few quotes from properly insured & licensed companies for $15,000 - $20,000. Wow, that is expensive so you take the time to do the estimate on labor yourself and see some prices of material. Then you approach your local handyman, Roger, who is also licensed and will use the neighbor's kids, who have worked construction the past few summers, for help. They tell you they can do it for $10,000. Now this is where you take the risk, right? No, hedge your bet! The risk seeking or risk neutral individual may choose Roger and the ladder. I am going to tell you why that is a poor choice and why, being risk averse and paying a premium, is the right decision.
General Liability Insurance: Roger and the kids do the work; all seems well, until it rains. It rains all night and you do not hear the leak pouring through the wall of the house and into the guest bedroom. It rains repeatedly before you go into the guest bedroom. A few weeks later you notice a smell, you walk into the guest bedroom to a moldy wall, destroyed carpet, furniture, radio, etc. Now what? At this point, you paid in full for the job. Yes, Roger and the kids can and should fix the leak. Do they need to pay for the damages? What if they can't afford to pay damages? You can sue Roger (we do not recommend this option) and the kids with expensive lawyers but the judges will most likely side with the blue collar, low-income workers and claim, “you should have hired a company with proper insurance”. As another example, if the work was completely wrong or needed to be redone, you would be stuck with it because Roger cannot afford to redo the job and the kids are back in school.
If you used a company with proper General Liability Insurance, you can relax. As far as the leak, you can ask the company to pay themselves for the damages. They may eat the cost or they have an option to file a General Liability claim with their insurance company. If they refuse to help, you can sue them (not recommended) with a legitimate case. If you win, they will pay your lawyer fees and all or most damages. You will most likely get either full or partial reimbursement and a fixed leak. If the work was not done properly according to a third party expert, same situation, you can get full or partial reimbursement to hire another company or you can have them come out and do it again to completely fix the installation.
Workers Compensation: God forbid something was to happen on your property where Roger or the kids were to be injured or lose their life. You will have to pay damages or the worker or the workers family can sue you for all damages, medical coverage, loss of wage due to injury or death. This could be anywhere from $10,000 to millions. Most companies are required to have workers compensation by law so if you went the safe route, although it is not pleasant to have someone get hurt on your property; you would be completely covered from loss. You will have a safe mind knowing that if anything happens your assets are protected and you are not personally liable, the company will be the liable party. If the company had proper insurance, they will be able to operate into the future. If not, they may go out of business with a major situation or death.
Companies pay General Liability and Workers Compensation premiums according to their size, industry and experience of insurance claims. Most of the time, it is a small portion of their sales and is certainly a valid way of screening the wherewithal of the business owner. If they are risky or neutral to the subject, do not do business with them. It is a "no-brainer". Companies need to be covered and homeowners need to care. Always ask the question and in some cases, get proof.
This thought process is recommended for any company that does any type of work at your personal residence or business. Pay the premium, hedge your bet, or you can be stuck with something much worse than when you started. Now you know the answer to, why hire a company with insurance? You also understand the benefits and importance of general liability insurance and the importance of workers compensation.
Reef Tropical Pool & Landscape is fully insured with General Liability and Workers comepensation along with a 5 million dollar umbrella. Our customers find this important and so do we. Good companies with smart business owners insure.
We use Insurance by Ken Brown, Inc. for Liability, Umbrella and Auto Insurance. Through Amerisure Insurance. IBKB have insurance customized for the swimming pool industry. Pool company insured is important. Pool Service, repair and construction.