One of the most important questions to ask when hiring a contractor to do work on your home is, “Are you properly and adequately insured?” Unfortunately, homeowners rarely pose this inquiry to prospective contractors, and it can prove to be a costly error.

Before a contractor sets foot on your property, you need to be sure that he has three different types of insurance.The first type of insurance is General Liability, which protects you if your property or your neighbor’s property is damaged. It also covers personal injury to your family and friends while the work is being done. It is important to be sure that the person you select has enough insurance. With the price of today’s homes and the cost of personal injury claims, $500,000 is the minimum level you should seek. However, $1,000,000 of General Liability insurance is a much more desirable amount of coverage.

The second necessary insurance is vehicle insurance. Your contractor should have this in the event that one of their trucks damages your property or a neighbor’s property while at your home. This insurance also covers any personal injuries caused by a contractor’s vehicle.

The aforementioned insurances protect you and your property. But, what happens if someone working on your home gets injured while they are on your property? By law, they must be covered by Workman’s Compensation insurance. Unfortunately, many contractors have employees who work “under the table” and are not insured. If one of these uninsured workers gets hurt, they can sue you, as the homeowner, for compensation.

You need to seek positive proof of all three of these insurances, especially Workman’s Compensation, before hiring a contractor to work on your home. This is extremely important for your protection since most homeowner’s insurance policies exclude covering damage or injury claims caused by contractors whom you authorize to be on your property. Why? Because you are responsible to be sure you’ve hired a reputable contractor who has insurance to cover accidents or negligence. If you hire an uninsured or underinsured contractor, and an injury or property damage occurs, you could be personally liable. Even worse, your own homeowner’s policy is unlikely to protect you.