Does a commercial insurance policy cover for contractor absense due to a terminal disease?
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Asked January 2, 2014
Liability insurance does not guarantee a job will be completed. The purpose of liability insurance is to pay for damages or injuries that were caused by the insured party. Where a terminal illness and inability to perform the job are concerned, traditional liability insurance will not be much use at all.
However, you can protect your investment and make sure the job is completed if you purchase a performance and payment bond. This is not a traditional insurance policy, but it would cover hiring a replacement contractor to complete the job if the primary contractor was unable to do the work. The original contractor would still be liable for the job and would be expected to pay the insurance company back for all costs once the job is completed. In essence a bond guarantees that the task will be completed, and the bonded entity is responsible for the costs of doing so.
The difference is that your commercial policy would pay for damages or injuries, but it will not guarantee work to be performed. A bond guarantees that the work will be performed, but it does not provide any protection against damages or injuries. However, since your concern is getting the repairs done, you only need to buy a performance and payment bond. The contractor that you hire is required by law to carry liability insurance, ostensibly paying for his insurance out of a portion of the money he makes on each job. In fact, it is a good idea to verify the insurance a contractor has before you hire them.
As the property owner, you are responsible for making sure that repairs are made, but the contractors you hire are responsible for making sure the work is done properly and without any liability concerns. You can buy a performance and payment bond, or you can elect to hire contractors who are already bonded. In the second case, the work performed for you is guaranteed under a blanket bond the contractor carries. This type of bond can be used over and over again, and is sometimes considered an important aspect of a qualified contractor.
Answered January 2, 2014 by Anonymous