Homeowners Building Their Own Home
Do they need Workers’ Compensation insurance?
The answer depends on a number of factors, according to a panel of experts from the Independent Insurance Agents & Brokers Association.
Some states exempt homeowners building their own home from the requirement to carry Workers Compensation by statute, case law, or regulatory ruling. You may want to visit the Workers’ Comp Compliance Center for a summary of these laws.
If your state has an exemption, you may be able to rely on your Homeowners Liability to some extent. If Workers’ Compensation is not in play, the remedy for the injured worker is a direct lawsuit against the homeowner under the negligence theory. Most Homeowners Liability forms will respond to negligence lawsuits from injured workers if there is no Workers’ Comp in force or “if not required by law to be provided.. However, many carry minimum limits such as $100,000 which certainly won’t be enough for serious injuries such as a fall from a roof. At a minimum, $300,000 should be carried in addition to a $1,000,000 Personal Umbrella policy.
The bottom line
It is certainly safer to carry Workers’ Compensation. However, the premiums can be very expensive unless certificates of insurance providing Workers’ Compensation is collected from all subs. Better yet, just hire a qualified General Contractor to build the home and carry the Workers’ Compensation.
This blog does not address the equally serious issue of whether General Liability insurance should be carried by the homeowner building his/her own home.