๐๐ฅ๐ค๐ฉ๐ฉ๐๐ฃ๐ ๐๐๐๐๐ฎ ๐พ๐ค๐ฃ๐ฉ๐ง๐๐๐ฉ๐ค๐ง ๐๐ฃ๐จ๐ช๐ง๐๐ฃ๐๐: ๐๐ง๐ค๐ฉ๐๐๐ฉ ๐๐ค๐ช๐ง๐จ๐๐ก๐ ๐ฌ๐๐ฉ๐ ๐๐๐๐จ๐ ๐๐๐ฅ๐จ
Have you ever come across a contractor with questionable insurance documents? Do you know what to watch for? This week, I received some suspicious paperwork and want to share some insights from my years of experience.
As many of you may know, I have a background in contracting and have also sold construction insurance. Over time, I've seen quite a few shady practices. Just this week, I asked a roofing contractor for his insurance certificates before starting the project (and handing over any money). He claimed he was waiting on updated certs from his insurance broker.
Now, I happen to know that broker and have a policy with them. Theyโre fast when it comes to issuing certs, so I immediately suspected he didnโt actually have insurance and was trying to get it at the last minute.
After a few hours, I finally received a liability certificateโbut no workerโs comp, which for roofers is especially expensive. So, I was already concerned. But the real red flag? The named insured on the certificate wasnโt even his name. The first name matched, but the last name was different. When I asked about it, he said it was his dadโs name and launched into a long explanation involving his brotherโs last name.
I responded, โSo, you sent me your dadโs insurance?โ He said they worked together but could get his own policy if needed.
Needless to say, this was a huge red flag. Not only was the insurance issue bad enough, but the deceit was even worse. Needless to say, he didnโt get the job.
This kind of insurance scam is something Iโve seen more of in cities like Los Angeles, where itโs a real Wild West for insurance deceptions. Contractors often borrow a friendโs certificate, or theyโll get a cheap online policy, grab the cert, and then cancel the policy the next month. Itโs crazy what some people will do to avoid paying for insurance.
Here are some tips to protect yourself from these practices:
Always ask for insurance certificates: The basic ones are liability and workerโs comp, though depending on the job, others might be necessary.
In some states, bonds are required for specific projects. The following tips apply to those as well.
ALWAYS call the agent listed on the certificate to verify the policy details.
When you call, ask if the policy is active, check the policyholderโs name, and verify the coverage limits (e.g., $1 Million liability, workerโs comp has no limits).
Ask whether the policy covers the specific type of work you're hiring them for. Itโs shocking how many contractors will buy a cheaper policy (e.g., for handyman services) but take on higher-risk jobs like roofing. They may have insurance, but the claim could still be denied.
Although this may sound like a tedious process, it's worth the effort. If a contractor causes significant damage or personal injury and doesnโt have valid insurance, you could end up with no coverage.
Itโs better to take these steps and be safe than sorry.
Happy Investing!
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