5 Steps To Understand All About The Contractor's Insurance

You know the saying, 'It is easy if you know how

?' This is exactly how you will feel when you learn how to find and zero in on the best possible workman's comp insurance and general liability insurance. But there are a few grey areas which may be cleared here:

1.Contractor's insurance - Did you know that this term is actually a misnomer? This is because this insurance protects the contractor and not the homeowner. The homeowner needs a surety bond to protect his or her home. This is often confused with the contractor's insurance because both the homeowner and contractor can buy it to protect themselves. The surety bond does help to "insure" the buyer against certain conditions or problems.

2.Is there a fixed amount to this surety bond? Yes it is and this amount depends from State to State. While in California the State requires the general contractors to carry a twelve thousand bond, in other states this sum varies. For example, Arizona requires five thousand dollars while Oregon requires twenty thousand dollars.

3.What does this sum imply? Many feel that this is the sum you could avail against a bad job. However, the bond is not against the job but against the contractor -- hence, the court would decide how much of this sum could be awarded to the aggrieved party. This is a long rope and usually is judged according to the value of the job.

4.What about damages? The damages are once again the purview of the judge. Other than fraud which the law is very clear about, damages need to be specified and quantified before any award can be made. The definition of 'damage' being very vague, it would require specific and clear proof of monetary loss before the homeowner can think of winning such a case.

5.What is the best thing to do if the contractor did a bad job? You need to pay a visit to the State Contractor Licensing Board and the Surety Bond Company. The Board would give you all the necessary information regarding which insurance company you should get in touch with; and the money will be given by the insurer. The latter may take the contractor to court to recover their money -- which once proves why the 'surety bond' is not exactly an insurance policy. The contractor would have to pay the money reimbursed.

Now that you know all about the difference between the surety bond and insurance, you go ahead and contact the best contractor out there without any worry in your heart. Ensure that you get the best contractor out there, even if he charges a little higher than the market rate for it is worth the trouble. While you might not lose too much money with a not-so-good contractor, you would lose time, enthusiasm and plenty of effort chasing various forums to get your money back and have the bad contractor penalized. It is always better to go for the best, instead.

by: Stewart Wrighter

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