Homeowners and property owners saving money on repairs, renovations, unseen perils

June 19, 2019

When anyone in California invites casual labor including those in Home Depot
parking lot the home owner/property owner become a defacto “employer” and
if a lawsuit follows an injury the property owner cannot win. One way is to purchase
actual workers compensation insurance from State Fund which is pretty expensive
at least $850 and likely twice that amount each year. So that is not a very viable
alternative, but for a home flipper it should be included as a ‘line item’ in their
project expense just like materials. Also because the property owner is the “General Contractor”
because he “subbed” the work out, should there be a contruction defect claim after the property
has been sold and transferred to a new owner there is no insurance to fall back on to defend the
property owner maybe years from now. The seller, former owner who performed the work is liable
for the construction defect claim. That can amount to thousands of dollars, so saving money by
not hiring an insured contractor may not have saved any money and may have very large exposure
to a future claim.
The next option is to hire a licensed , insured, contractor and sign a contract
for the job. The contractor should never be allowed on the job until the property owner
has a “Certificate” of Liability Insurance naming the property owner as “Additional Insured”
And a Certificate of Workers Compensation insurance. I recommend once the property owner has in their
hand a Certificate of Insurance as we recommend, it’s imperative the property owner actually call or visit
the insurance agent, or broker who signed the certificate, state they are the Certificate Holder and “verify”
the insurance is in fact in force. I had a policyholder present a Certificate of Insurance to a Vendor and it was
altered, that is the policyholder forged the dates on the certificate and actually named the vendor as additional
insured without the insurance agent or broker having completed the form. The coverage for the vendor did not exist.
and the policyholder denied altering the certificate. I was speechless.
On a side note, even though State Compensation Insurance Fund will issue a Certificate with Additional Insured
is does not confer any policy rights or priveiedges to the certificate holder, it is an “Additional Interested Party”
which means the Cert holder cannot file a claim, the policyholder must file the claim. On the Commercial General
Liability policy when the Cert Holder is named as Additional Insured that cert holder has the privilege to file a claim
on that policy. The Really Big Benefit to being named on both policies is that the insurance company or agent/broker
must notify the Cert holders if the policy is cancelled or lapsed for any reason, non payment or non renewal. Many insurance
companies charge for issuing these certificates, some companies have a “blanket” addition insured endorsement so the cost
of all future certifcates is included the annual premium. It varies by what type of contractor and the insurance policy itself.
The conclusion here is that no one is saving money bypassing an insured contractor, they are in fact exposing themselves
to future claims that no one will defend, from workers comp injuries and construction defects. Verifying the validity of
the certificate is just prudent, but it cannot be done without actually having the certificate in hand as the insurance agent
will not disclose information without valid proof the cert holder has rights to ask for proof. The certificate holder has the
right to verify the validity of the certificate of insurance.
Exposure to casual labor is a disaster in the making, and that includes uninsured contractors, if the contractor brings laborers
to the job and is not insured the property owner becomes the defacto employer, just as if they had picked up laborers in a parking lot.