One of the most common questions people ask me is whether or not a contractor who hurts themselves in someone’s home can sue the homeowner for their injuries.

The bad news is that yes they can. This is America. The good news is that they probably won’t get very far, and even if they do, the liability portion of the homeowners insurance policy will respond to defend the homeowner and will pay damages if they are found to be negligent.

There are a few issues at work here, so let’s run through them.

For starters, workers compensation insurance covers medical expenses and provides other important coverages for employees that are injured on the job. Workers compensation coverage is primary over all other coverages and employers that carry it gain immunity from lawsuits by employees hurt on the job.

In Florida, a company in the construction industry is required to carry workers comp insurance if they have even one single employee. Officers of a corporation or sole proprietors can elect to exempt themselves from coverage, but this does not apply to employees. All employees must be covered. To exempt themselves, employers must file a notarized form with the state of Florida, stating that they do not want to cover themselves against on the job injuries.

Let’s take it back to the beginning and assume that an electrician changing a light fixture in your house burns himself. Hopefully, he is covered by workers compensation insurance and 100% of his medical bills, plus lost wages, will be covered by the workers compensation carrier. If his workers compensation carrier decides that you were actually at fault and subrogates, or comes after you to recover the money that they paid out for the claim, your homeowners insurance policy would respond.

If he isn’t covered by workers compensation insurance, that means that either he has filed a notarized form with the State stating that he doesn’t want to be covered by workers compensation, or he (or his employer) is in violation of the law by not carrying the coverage. This puts the homeowner in a very strong position. And once again, your homeowners insurance policy would respond.

My advice, deal with reputable contractors who carry the appropriate workers compensation and general liability insurance. I know that this isn’t always practical, but you can save a lot of headaches if you do.

To verify workers compensation coverage and exemptions, you can look up a contractor on the State of Florida’s website:

https://apps8.fldfs.com/proofofcoverage/Search.aspx
The Institute of Risk Management and Insurance (http://www.irmi.com) also has some very useful tips for picking a contractor.

•  Obtain recommendations from friends, family members, and neighbors about experienced and reputable contractors who have performed excellent work for them. I also find that realtors are a great source for contractor referrals. They  deal with people coming and going from homes and can often recommend more than one tradesman.
•  Be wary of contractors who solicit business door-to-door or via cold calls. In addition, avoid contractors who quote you a price that will automatically go up the next day or week if you don’t accept it immediately.
•  Ask for a written estimate from the contractor that includes any oral agreements the contractor makes in this process. The estimate should contain a line-by-line breakdown of costs, including materials and labor.
•  Verify that the contractor is licensed, bonded, and properly insured. Ask for certificates of insurance for workers compensation and general liability policies. You should also receive these certificates for any subcontractor the general  contractor may hire to work on your home. A certificate of insurance is a standard document showing what coverage is in force, when it expires and the limits of coverage. The contractor’s insurance agent can send these directly to you  to ensure accuracy.
•  Contact the Better Business Bureau to see if complaints have been filed against the contractor. This can be performed via the bureau’s Web site at http://www.bbb.org.
•  Get a copy of the proposed contract. Ideally, it should include a hold harmless clause in your favor, particularly for major work such as when heavy equipment will be used in constructing a swimming pool. A hold harmless clause  specifies that the contractor will indemnify you with respect to your liability to members of the public who are injured or whose property is damaged during the course of the contractor’s operations. The contract should also explicitly  establish an independent contractor relationship.

Thanks to David Thompson at the Florida Association of Insurance Agents (http://www.faia.com) and the Insurance and Risk Management Institute (http://www.irmi.com) for their help with this post.

Phil Yanan, CPCU
pyanan@wwfins.com
786-454-8383