Hiring a Contractor Without Insurance: What Are the Risks?

Hiring a Contractor Without Insurance: What Are the Risks?

When it's time to tackle a home improvement project—whether it’s a kitchen remodel, roof replacement, or a new deck—you may be tempted to save money by hiring a contractor with a lower price tag. But if that contractor doesn’t carry insurance, you could end up paying much more than you bargained for. Here’s why hiring an uninsured contractor is a risky move that can have serious financial and legal consequences.

1. You Could Be Held Liable for Injuries

One of the biggest risks of hiring an uninsured contractor is liability for on-the-job injuries. If a worker gets hurt while working on your property and the contractor doesn’t have workers’ compensation insurance, the responsibility may fall to you—the homeowner. This could mean paying for medical expenses, lost wages, and even legal fees if the worker sues.

Example: A contractor falls off a ladder and breaks a leg while painting your house. If they’re uninsured, you could be responsible for thousands of dollars in medical bills.

2. Damage to Your Property May Not Be Covered

Contractors with general liability insurance are covered in case they accidentally cause damage to your property while working. Without this insurance, any damages they cause could come out of your pocket.

Example: An uninsured contractor accidentally ruptures a water line, flooding your basement. If they don’t have liability coverage, you may have no way to recover the cost of the repairs.

3. No Recourse for Poor Workmanship

If a contractor does shoddy work and doesn’t have insurance or a license, your options for recourse are limited. Many states require contractors to carry insurance in order to be licensed. Without proper licensing and insurance, it becomes much harder to pursue claims or complaints through legal or state channels.

4. Your Home Insurance May Not Cover Related Claims

Some homeowners assume their insurance will protect them in all scenarios, but that’s not always the case. Many policies have exclusions or limitations when unlicensed or uninsured contractors are involved. In worst-case scenarios, your own policy could be voided or you might face higher premiums after a claim.

5. Legal Trouble from Unpermitted Work

Uninsured contractors may also be unlicensed and more likely to cut corners—including skipping permits. If the city discovers unpermitted work, you could be fined and required to redo the work at your own expense.

6. Difficulty Selling Your Home Later

Improper or uninspected work can come back to haunt you when it’s time to sell. Home inspectors and potential buyers may flag renovations done without proper documentation or permits, lowering your home’s value or derailing a sale.

How to Protect Yourself

• Always ask for proof of insurance (both general liability and workers’ comp).

• Verify licenses and permits with your local building department or licensing board.

• Get everything in writing, including the scope of work, payment terms, and proof of insurance.

• Consider using contractors referred by reputable sources like trade associations, local builders’ groups, or trusted professionals.

  
  

Final Thought: Saving a few bucks up front by hiring an uninsured contractor could end up costing you thousands—or much more—in the long run. When it comes to your home, peace of mind is worth the investment in a properly insured and qualified professional.