You’ve wanted to renovate your cramped, outdated kitchen for ages. Or perhaps you are deciding between staying in your home after major damages or selling and walking away from some potential pricey repairs. Like many, asking around among friends and co-workers may initially help find and hire a contractor, but making sure your contractor is insured in Michigan is of vital importance.
Things can get ugly – and appallingly expensive – if your contractor isn’t insured. If things don’t go perfectly, you can land in a world of drawn out disputes, expensive fixes you have to foot the bill for, and far more stress than you initially bargained for. You can avoid such a situation, however, by making sure your contractor is reputable and fully insured.
Difference Between Bonding and Insurance
Most reputable contractors in the St. Louis and Michigan areas advertise themselves as “bonded and insured.” But what exactly does that mean for your protection? In a market where home values are up roughly 1.1% to 5% year-over-year, protecting your equity during a renovation is more important than ever.
Surety Bonds: A bond acts as a financial guarantee. If a contractor fails to finish your project or delivers “shoddy” work that doesn’t meet local Missouri building codes, the bond ensures you are protected. Instead of dipping into your own savings or filing a claim against your homeowner’s insurance—which can raise your premiums—the bond covers the cost to rectify the situation.
Contractor’s Insurance: While bonding protects the contract and work quality, insurance protects against accidents and liability. If a worker is injured on your property or a pipe bursts during a kitchen remodel, the contractor’s insurance covers the damages and legal fees. Without this, you could be held liable for medical bills or property repairs, which is a risk no homeowner should take in 2025.
Determining the Right Level of Coverage in Michigan
Taking steps to verify insurance is just the first step. With the median sale price in the region now hovering around $220,000 to $270,000, you must ensure your contractor’s policy limits are sufficient for your specific property value. If you live in a high-end Michigan neighborhood with a home valued at $1.5 million, a contractor with only $500,000 in coverage leaves you dangerously underinsured.
Your general contractor should carry a comprehensive liability policy that includes:
- Liability Insurance: Covers injuries to you or your family and shields you from personal lawsuits.
- Workers’ Compensation: Protects the contractor’s employees if they are injured on-site. (Note: While some smaller Missouri contractors may claim exemption, always ask for proof to ensure you aren’t liable).
- Property Damage: Specifically covers any damage to your structure or belongings during the project.
Actionable Steps to Mitigate Your Risk
How can you be certain your contractor is truly covered? In the digital age, it’s easier than ever to do your homework before any demolition begins. Follow these steps to ensure you’re working with a reputable professional:
- Verify via the Better Business Bureau (BBB): Look for an “A” rating and check for any unresolved complaints in the Michigan area.
- Request Current Certificates: Don’t just take their word for it. Ask for a Certificate of Insurance (COI) and a copy of their bond documents.
- Formal Strategy Meeting: Before signing, have an in-depth meeting to discuss the scope, local permits, and safety protocols.
- Everything in Writing: Ensure the contract includes clear milestones, a firm completion date, and contingency clauses for unexpected delays.
The Subcontractor Loophole: Are They Covered?
A major project—like adding a year-round porch or a “home wellness space”—often involves several different crews. Your general contractor might hire specialized “subs” for electrical, plumbing, or framing. A common mistake is assuming the general contractor’s insurance automatically covers everyone on-site.
Sometimes subcontractors are brought in on a “cash basis,” meaning there is no official record of their employment. If an uninsured subcontractor causes damage or gets injured, you could be left footing the bill. Always ask your contractor how they vet their subcontractors and verify that their policy extends to everyone working on your Michigan property.
Navigating Your Options with Speedy Sale Home Buyers
Knowing how to verify a contractor’s status is crucial for any major work done in or on your home. If you are feeling overwhelmed by the costs and risks of renovating a damaged home in today’s market, remember that you have options beyond the traditional “repair and list” model.
At Speedy Sale Home Buyers, we understand the Michigan market because we live and work here. If the thought of managing contractors and insurance documents is too much, we can help you explore a direct, as-is sale that bypasses the need for repairs altogether.
Want to walk through your options for a stress-free sale? Call us today at (313) 552-8608 or fill out our contact form to get started!