For almost every home improvement business, insurance is expensive. That’s why so many roofing contractors use clever tricks to avoid paying for proper insurance. Unfortunately, many homeowners who hire these contractors don’t realize this until it’s too late.
It’s no secret that the roofing industry has a bad name. Storm chasers and cheap roofing contractors that produce shoddy work have made it difficult to trust anyone to do the job well.
For this reason, selecting a trustworthy roofing company requires a lot of research. Previous work, customer reviews, pricing, and licensing will all tell you a lot about any company you choose. But even if all of those things check out, one uninsured accident can quickly end up costing you a lot more than the price of a new roof.
Despite other benefits a roofer may promise, it’s important to be sure you’re protected in the case of incomplete work, accidents, or damages. But as contractors invent new tricks to avoid paying for proper Workers Compensation and General Liability insurance, making sure your roofer is adequately covered can be a difficult task.
Here are a few ways that contractors try to cut corners with insurance, and what to look for when choosing a legitimate roof company for your project.
Any legitimate and responsible roofing company will have at least three main types of insurance. Before you consider hiring anyone, check to make sure they have a roofing license and bond, workers’ comp, and liability insurance.
First, a roofing company should be both licensed and bonded. In many states, it is illegal for a roofer to do business without a proper license registered with the state.
In basic terms, a roofing license means two things:
The bottom line is this: a roofing license is one layer of proof that you’re working with a legitimate company.
Bonding is like insurance against incomplete work. A bonded roofing company will be legally obligated to complete your roof repair or replacement project upon starting the job. If for some reason the bonded roofing company does not complete that project, you (the homeowner) are protected against losing money from hiring another company to complete the construction. For small-time roofing contractors without much experience, a bond can be hard to obtain.
To verify whether or not a contractor is bonded and licensed in your area, you should start by asking them. If they refuse to show proof of either qualification, that’s a red flag. However, even if they do offer proof, it’s best to call the city to verify that information. For Illinois residents this information can also be found with the Illinois Department of Financial and Professional Regulation.
Workers’ compensation insurance (also called “workers’ comp”) protects both you and the roofer from being financially responsible for employee injuries that occur on the job. In other words, if a roofer falls off your house and breaks a leg, workers’ compensation insurance covers the medical bills and any paid leave for the injured employee.
Other industries may have a lower likelihood of injury, but roofing is a dangerous job. In fact, approximately 50 roofers die every year from falls, electrocution, heat exhaustion, and more. That doesn’t even factor in the amount of non-fatal injuries that require medical attention.
While you certainly hope that all safety precautions are followed during the roofing job to prevent injuries, accidents still happen. That’s why it’s important to verify that a roofing company has adequate workers’ compensation insurance before hiring them. You don’t want to be liable for those injuries as the property owner if the worker is uninsured or their policy doesn’t cover enough types of potential injuries.
Luckily, this type of insurance is required by law for any roofing company.
General Liability insurance specifically covers damage to your home or surrounding property. If damage occurs as a result of the roofing job, liability insurance typically covers the necessary repairs.
When working up high, falling objects create the most obvious risk for property damage. Tools, shingles, plywood, nails, and other objects may fall from the roof by mistake and damage things on the ground. In other cases, there might be unintentional damage to the roof itself, the siding, gutters, skylights or windows.
Of course, a responsible roofer will be careful to finish the job without causing any damage, but accidents happen. Imagine a nail gun plummeting from your roof and smashing into your car windshield. Maybe a stack of shingles slides off the roof, slams into your AC unit, and finally crushes a set of bushes.
While you might have homeowner’s insurance or car insurance to cover these incidents, you shouldn’t have to use your own policy to handle someone else’s damage. When you pay someone for a roofing job, they should be adequately insured to deal with their own mistakes.
That said, requirements for all types of roofing insurance vary by state. Some states only require insurance based on the number of full-time employees or the size of the company. Because of this, small-time contractors may try to cut corners by hiring only part-time employees as needed. This often results in low quality work from unskilled workers that won’t produce a positive ROI.
With insurance costs rising and homeowners seeking quality work from trusted companies, roofing contractors are put in a tough spot. They either have to get legitimate insurance to establish trust with their customers or find a way to look like they have it without actually paying for it.
While many contractors appear insured at first glance, the reality is that many of them are cutting corners or blatantly deceiving their customers. Although some of these may be hard to spot, here are a few common insurance tricks to look for when selecting a roofing company.
Many times, roofing contractors try to cut corners by only paying for a policy with poor coverage. If you ask these contractors for proof of insurance, they may show you a policy. But after further inspection, it won’t cover much.
Also known as handyman insurance, these policies only cover low-risk maintenance tasks. While you may be covered from accidents that occur during painting or yard work, a low-risk policy won’t be enough to cover a roofing accident. That’s the trick: At first glance, handyman insurance looks like enough coverage for most home improvement projects. But that isn’t true.
In reality, cheap contractors will purchase a policy with low coverage on purpose to save money. If this is the case, an uninsured contractor who gets hurt on your property can hold you (the homeowner) liable for anything that that policy doesn’t cover. In other words, if a roofer with handyman insurance falls off your roof, you’ll be paying the medical bills.
How to avoid the trick: Before selecting a company for a roofing project, read carefully through the policy and be sure it specifically covers roofing work.
“Ghost” insurance policies might seem like an effective solution for small-time contractors, but they don’t actually offer much protection to anyone. In basic terms, a ghost policy provides proof of workers’ comp insurance for an independent contractor while excluding the “owner of the business” from any real coverage.
Because an independent contractor is effectively the ”owner” of their own business, many states require them to show proof of worker’s comp insurance as if they had employees. However, since they technically have no employees, a ghost policy allows the contractor to show proof of insurance at a lower rate because they themselves are excluded from coverage.
While ghost policies might be technically legal, they certainly aren’t responsible. Although the contractor’s business has worker’s comp insurance, the policy states that the contractor (i.e. the person working on the roof) isn’t covered for anything at all.
If an accident happens, the outcome is the same as if they were completely uninsured. This could leave you liable for their medical bills and finding another company to complete your roofing job.
How to avoid the trick: If possible, read through the insurance policy before hiring anyone to be sure the right people are covered for the job.
In some cases, small-time contractors who can’t afford insurance will only pay for the first month. Once they sign up for an insurance policy and obtain a certificate of insurance (COI), they will stop paying the premiums. They will then retain the COI to present to customers as proof of insurance when in reality the policy is inactive.
These contractors may even have a copy of the policy information on hand and will let you read through the supposed “coverage.” However, if you were to contact public records, you would find that they aren’t insured at all. What’s more, that certificate doesn’t mean anything when an accident occurs. In reality, they are completely uninsured.
Although presenting fake insurance is illegal, many contractors don’t get caught doing this because few people take the time to dig deeper.
How to avoid the trick: Spotting a false certificate can be tough. Ask the roofing contractor to add you to the policy as an Additional Insured for that specific job.
Even though it may seem strange, some contractors don’t try to hide the fact that they’re uninsured. They simply don’t carry workers’ comp or liability insurance at all. In some states, it is perfectly legal for a small contractor to run their business without workers’ compensation. In other cases, unprofessional contractors may try to get by without insurance, even if they know they’re breaking the law. These companies may not have a lot of visible advertising, but they will likely try to win the job by offering the lowest bid.
Either way, working with a contractor that doesn’t bother to have legitimate insurance is a dangerous move. One accident can leave you paying for someone’s medical bills or replacing part of your property. You’ll likely be paying another contractor to cover the roofing project as well. But beyond that, a roofing contractor that cuts corners with insurance is likely to cut corners in other ways that won’t benefit your project in the end.
At Baltic Roofing, we know how important it is for a roofing project to be covered by adequate insurance. That’s why we carry more than $1 million in worker’s compensation insurance and $2 million in liability insurance. That’s well above the industry average for a roofing company, but we believe it’s worth going the extra mile for peace of mind.
While we may not offer the lowest price for a roofing project, we charge enough to get the job done right and provide adequate protection against accidents on the job.
We are licensed and bonded to do work in Illinois, but we’ll do more than just finish the job and move on. We always do a thorough quality inspection to be sure your roofing project is completed according to our strict standards and local building code requirements. We also do a walk-through at the end of each project to make sure you’re 100% satisfied.
Small-time contractors usually try to cut costs in one way or another to try and win more business or increase profits.
But you have to ask yourself—where exactly are they trying to save money? If avoiding insurance or committing insurance fraud is the reason a contractor can offer the lowest price, imagine what else you might deal with by working with them.
In addition to being unprofessional, a contractor that lacks proper insurance often lacks an attention to detail that’s essential to a valuable roofing project. Beyond that, the roofing industry is full of scammers and cheap contractors who are waiting to pull tricks like these and profit off homeowners who don’t know what to look for.
If you take the time to invest in a new roof for your home, you deserve a high quality result that improves your property overall. More than that, you deserve a positive experience in getting it done.
Working with a legitimate roofing company will provide you with increased home value, protection against damages, and peace of mind. Contact our team at Baltic Roofing for a roof inspection, repair, or replacement project you can trust.
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