April 8, 2012

Ask For Proof Of Insurance

WorkSafeBC has recommendations for homeowners


People looking to hire someone to do work around the house might not know it, but they should be asking for two important letters from their contractor. First and foremost, most people want to know how much a project will cost. But any savings realized by accepting the lowest offer may become an expensive problem if the contractor lacks sufficient workers’ compensation and liability insurance. “Everybody wants a deal these days,” says Ron Egli, president of the Victoria construction company that bears his name. “All they ask is if we can do it for cash, or if they can avoid the HST.”

While hammering out the lowest price from eager contractors, homeowners tend to overlook insurance because they automatically assume whomever they hire has adequate coverage. But that’s not always the case. Most reputable businesses carry workplace insurance and are registered with WorkSafeBC, the operating name of the Workers’ Compensation Board of B.C. The statutory agency collects insurance premiums that pay for compensation associated with work-related injuries sustained by employees of the company. Premiums are based on the earnings of the company’s workers.

WorkSafeBC recommends homeowners first check if the company or individual is registered with the agency before work commences. Ask for their account number. Ask for a clearance letter. A clearance letter confirms the firm is registered and has been paying premiums. Homeowners can also check on the company’s or individual’s status online. WorkSafeBC then recommends the homeowner do a second check at the conclusion of the project — and before paying for it.

“It would ensure that the contractor had paid their insurance coverage over the full period of a project,” says WorkSafeBC spokeswoman Megan Johnston. “This would ensure a homeowner would not be liable if a claim was made after the project ended.” These days, the checks can even be done from a person’s smartphone. If the homeowner hires a tradesperson who isn’t registered, the homeowner is bound by law to register with WorkSafeBC and pay that workers’ compensation premium while working on the property. Homeowners become, in effect, the prime contractor.

Recently, a report released by WorkSafeBC ruled former B.C premier Gordon Campbell was the prime contractor when a worker was killed while performing work on his vacation home. This meant he was legally responsible for the coordination and establishment of health and safety compliance on the work site. He was given a written order of what to do to comply in the future. Workplace insurance protects the homeowner from lawsuits by workers seeking compensation from work-related injuries. A homeowner’s house insurance does not cover workplace injuries.

While work site insurance covers workers, general insurance covers damage to the property by the workers. Some contractors come well prepared. “I carry $5 million in insurance coverage all the time,” says Jake Friesen, owner of JF Construction. “It covers me for flood, fire or if I just break something on the job.” He says adequate insurance is a must for commercial jobs. “If I didn’t have it, I wouldn’t get the job.” Commercial jobs typically require proof of insurance such as a letter from an insurance company. A $1-million liability insurance policy costs a business about $750 a year. They generally have a $1,000 deductible.

High-risk occupations have higher premiums. The rate can go up if there have been reported incidents, and go down over time if a business has a clean record. But homeowners are more lax — and that can be an expensive oversight. Friesen says some homeowners have asked if he has insurance, but none have demanded proof. He cautions that while the majority of contractors are honest, there are some who aren’t, and homeowners need to be vigilant.

“It is the homeowner’s responsibility to ensure whoever they hire has [liability] insurance,” says Patricia Whitefield, general manager for Harbord Insurance. “A prudent homeowner would also inform us of the nature of the work that is being carried out, so the home would be appropriately covered during and after the renovation or addition.” She says people can ask for a letter of confirmation that the company they hire has adequate insurance. “All they have to do is request a copy.”

Victoria Times Colonist

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