Construction Insurance Question

Quick Question for all my Insurance peeps out there.

Is there an insurance option that covers home owners if a contractor skips out half way through a renovation job?

Had someone talking about something today during a demo, and thought if something like this actually exists.

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CuriousFox

WR Officer

🦊

@Incognito Is this something you can help with?

BmajoR

Arsonist

Account Executive

You beat me to it!

Incognito

WR Officer

Master of Disaster

That’s called a surety (performance) bond. Not typical for homeowners to require, as it will cost the contractor money to get one and they will need to have construction focused CPA prepared financials to even qualify, plus a personal guarantee. I don’t do personal lines, so I’m not familiar with homeowners policies but you’d probably get a builders risk. As with any coverage, the scope can vary greatly depending on the broker who sold it to you and/or the amount of money you spend (plus the carrier and underwriting capacity). The best bet is to not pay until the work is completed. If they fuck off, so does their paycheck 🤷‍♀️ *edited to add - make sure you get some kind of completed operations coverage plus faulty workmanship in case they do shit work.

TheLaughingWolf

WR Officer

Business Development Manager

Thanks Incognito. I want to describe what I am thinking but I don't want to sound like I'm pitching my company here and in all honesty it would out me to everyone here. This is not for me personally but looking to add a service like this by partnering with an insurance company/broker.

We have something set up where it would be milestone payments. Where the concern is that if the contractor just takes off after the 1st or second milestone.

Would completed operations coverage and faulty workmanship work if they do take off, or if they do do shit work?

I'm really sorry to everyone if this sounds like I'm pitching, but I don't know any insurance people I could ask and I thought the War Room might be the best place to start looking for answers.

Incognito

WR Officer

Master of Disaster

Lolz wish I could share some work in process pages from a construction financial. Google it.

most major jobs don’t pay in lump sums, but it depends on the contract. Some pay in installments, and most hold retainage until after the project is complete. Usually 10%. There are also change orders and that’s a whole other rabbit hole.

listen to this whole series, I think it will be very helpful:

https://youtu.be/D1rsQCsfGW8

TheLaughingWolf

WR Officer

Business Development Manager

Thanks so much. I really appreciate all the help. Going to watch this series right now while drinking some tea. lol

Incognito

WR Officer

Master of Disaster

It’s really excellent. Tag me here for more content or questions if you need.

TheLaughingWolf

WR Officer

Business Development Manager

I sure will. Thanks again.