The Expert Podcast

If you're a contractor or handyman or if you're a consumer looking to hire somebody to do work on your house, be aware that "handyman" is a category of worker that many times you see advertised on Craigslist, Facebook, or even a sign on a bulletin board somewhere. The question is, what's the difference between a handyman and a contractor? A lot of times, it has to do with what kind of work they're doing. Does it require a license? Is it in certain categories like plumbing, electrical, or even some framing that has to be done by a licensed contractor?

Regardless of whether or not you hire a contractor or you are a contractor, be aware that workers' compensation is an important thing to consider. If you hire a handyman to work on your house and they get hurt on your property, you may have serious insurance problems. Your homeowners' insurance might not cover it because they were technically an employee. You might say, "Well, I'm not an employer, I'm not setting up payroll," but many states have rules about what qualifies as an employee. Again, we're not attorneys, we're not giving you legal advice, but you want to know what you're getting into if you're hiring a handyman.

If you are a handyman, you also might want to have insurance because some of the jobs you work on might require you to have proof of insurance or coverage. It's good to have it anyway because if you do get hurt, you have some coverage, and you can present that to your client. Clients may not know this, and they might be calling five people out of the phone book or Craigslist, getting quotes to fix their deck. If your quote is $900 and everyone else's is $400, you might think they'll go with the cheaper bid. However, if you tell them that you have work comp coverage and they're not going to be liable if you get hurt, they might be willing to pay more. Nobody wants to be on the hook for $50,000 in injury claims if someone gets hurt, swings a hammer and hits themselves in the head, or cuts off a finger with a saw. You want to be the one that shows professionalism and coverage.

However, getting insurance isn't the easiest thing. The market for insurance is tough, and not all people have an easy time obtaining this coverage. According to an Insurance Journal, due to the varied duties of handymen, insurance carriers may shy away from writing work comp for this class of business, especially if they're a new venture. From an insurance agent's standpoint, it's exhausting to go through that process. Unlike automobile or homeowners' insurance, this type of coverage is not easy for the insurance agent to write or for the client to get.

You see ads on TV all the time from Progressive, Geico, and other insurance companies begging to sell policies. However, handyman insurance is very difficult to obtain. In some states, you have to go to what's called an assigned risk pool because no companies want to write it. Often, as a handyman, you're required to show coverage before you start a new job. If you can't get that policy, how are you going to get the job to begin with?

There are options for this. If you are a handyman or a smaller contractor, get with a good insurer to see what options you have. Start the process early because it might be complicated. It might not be as simple as making a phone call and reading some information.

If you're a consumer looking to hire a handyman, ask them what they have for insurance: general liability, work comp, etc. You want to know what liability you might have if someone working on your property gets hurt. If you're a larger contractor, make sure all your employees have work comp so that you're covered.

Be aware that this insurance is more than just a piece of paper. It protects everyone from potential financial burdens and problems down the road.