What Level of Liability Coverage is Needed for a Home Addition?
We’re preparing for a significant addition to our home that will take over four months and require multiple subcontractors. During this time, we’ll still be living in the house.
The builder’s contract specifies that they will carry $2 million in general liability insurance, with a limit of $1 million per occurrence. However, they also mention that if we want additional coverage, it’s our responsibility to secure it. Our current homeowners’ policy provides $500,000 in liability coverage.
Do you think having a total of $2 million plus the $500,000 is sufficient? It seems like a lot to me, but I’m not an expert.
Are there any other important questions I should ask the builder regarding their insurance coverage?
It’s great that you’re being proactive about understanding liability coverage for your home addition. The combination of your builder’s $2 million general liability insurance and your homeowners’ $500,000 liability coverage totals $2.5 million, which is generally considered adequate for most home improvement projects. However, here are some points to consider:
Evaluate the Project Scope: Depending on the size and complexity of your addition, you might want to assess if $2.5 million is sufficient. Larger projects or those with significant potential risks (like major structural changes) may warrant additional coverage.
Subcontractor Insurance: Ensure that all subcontractors working on the project also have their own liability coverage. Ask your builder for proof of these policies and how they handle subcontractor liability.
Builder’s Coverage Details: Ask your builder for specifics regarding what their $2 million coverage entails. For example, what types of incidents are covered? Are there any exclusions you should be aware of?
Worker’s Compensation: Confirm whether the builder has workers’ compensation insurance for their employees. This is important to protect against accidents that may occur on-site involving workers.
Additional Riders or Policies: Consider if you need additional coverage, such as a home renovation policy or a personal umbrella policy, which can provide extra liability protection beyond your existing policies.
Incident Reporting: Inquire about how the builder handles incidents on the job. Understanding their process for reporting and dealing with accidents or property damage can provide peace of mind.
Ultimately, it may be beneficial to consult with your insurance agent to discuss your specific situation and get tailored advice on the appropriate level of coverage for your home addition project.