Many of us do not like the idea of paying an exorbitant amount of money to have basic repairs done on our rental property. Owners ask us all the time how they can avoid the $75 trip charge to have a professional vendor or contractor come out. Most of you have a pickup truck guy who has been your handyman for years, and maybe the same repair would cost you only $30 or $40.
Today, we’re talking about the dangers involved in hiring contractors who aren’t licensed and insured.
Insurance Protects You from Financial Risk
We live in a sue-happy society. Tenants expect everything and more. While we don’t have problems with all tenants, some of the people you rent to will create issues where little things can become big deals. This is why you need contractors who have been qualified through a process. You also want them to have insurance.
You might find yourself in a lawsuit if you hire a worker who doesn’t have the right insurance. You’ll be on the hook for a lot of money if that pickup truck guy you usually hire falls off a ladder and breaks his neck while he’s trimming back the tree branches on your rental property. His family may sue you because you’re the one who hired him to do that dangerous work.
Licensed Contractors Protect You from Liability
Maybe you have a vendor who isn’t licensed or insured and doesn’t realize the implications of having an adult male vendor go to a property where there’s a young female all alone. Whether something happens or doesn’t happen isn’t the issue; if that worker gets accused of something, you’ll be held liable.
Using licensed and insured vendors goes beyond desiring a higher quality of work. Your contractor has a liability policy and a worker’s comp policy, and these policies go a long way in prequalifying who we will do business with. It protects you and the property manager from liability.
We have found it’s critical to not hire the cheapest person just to save money. Hire reputable people with an address you can track and insurance you can verify. Make sure the policy is real; we have come across fraudulent insurance documentation. Taking these steps may cost a little more for today’s repair, but it will save you a lot more money if something unexpected happens.
I know cost is of importance to us as owners and property managers. But, it’s important not to bypass this particular filter when it comes to insurance.