What brokers need to tell homeowners hiring renovators

Brokers placing home insurance should be advising clients on how to vet renovation contractors, a spokesperson for a bidding website advises.

Some contractors could be working on homes without having workers compensation insurance, and while they may have insurance certificates and skilled trades licenses, such documents can easily be faked, said Nicole Silver, public relations and digital marketing specialist for TrustedPros Inc., a website that matches Canadian homeowners with contractors looking for leads on reno projects.

Insurance brokers “should really understand what due diligence means” when it comes to hiring renovation contractors, she added. Due diligence includes checking a contractor’s trade license, liability insurance certificate and proof of workers compensation insurance.

In a recent survey that TrustedPro conducted with nearly 400 Canadian contractors, 74% of respondents said clients do not ask to see their skilled trade licenses while 59% said clients ask to see proof of workers’ compensation insurance.

In Ontario, the Workplace Safety Insurance Board (WSIB) provides no-fault insurance coverage for workplace injuries, meaning employees who are covered generally do not have the right to sue. But some construction workers who are in business for themselves are not required in Ontario to buy WSIB coverage.

That exemption “leaves the homeowner susceptible to legal liability in the event that the home renovator injures himself or herself while performing their work,” Bill Nicholls, president of the Provincial Building and Construction Trades Council of Ontario, told a legislative committee in 2008 during hearings on Bill 119. When that bill took effect in 2013, independent operators in institutional, commercial and industrial construction had to start buying WSIB coverage but some contractors working exclusively in home renovation are exempt, WSIB notes.

Brokers would do well to know about workers’ compensation insurance laws in their province, “and how homeowners can check up on that,” Silver said. If a homeowner plans to hire a contractor who does not require provincial workers’ compensation coverage, the homeowner should find out whether his or her home insurance covers liability if that contractor gets injured and sues the homeowner.

When checking a prospective contractor’s liability insurance, the homeowner should not simply trust the certificate. “They really should be calling [the contractor’s insurer] and verifying that this information is sound,” Silver said.

Ditto for tradespersons’ licenses.

“When a homeowner hires a tradesperson who is not licensed, there are a number of risks they are taking on,” Silver said.

A tradesperson who has completed an apprenticeship program has “actually worked in the field under an expert and they have learned the ropes from somebody who is licensed,” she added.