| My wife seems never entirely
satisfied with our home. It was perfect the day we bought it, but then
it suddenly lacked a little space here or a cabinet there. We moved from
our previous perfect home to this perfect home and each time she swears
the next move we'll make is to the nursing home. I know better.
When making home improvements such as building on an addition, hiring
contractors to paint, redoing flooring or whatever, it helps to know
what property is insured and whether liability coverage applies for
employees or contractors in the homeowners policy.
Let's first take the case of building a new home at another site.
There is no coverage for the new home itself while under construction.
Purchasing a builder's risk policy can provide that coverage. If you are
planning some construction to your existing home, you should visit with
your agent about the need to increase the amount of coverage on your
home, or possibly obtaining a builders risk policy, depending on the
job.
Personal property and liability exposures can be addressed by the
homeowners policy. If the home being built is away from your current
residence, then limited coverage is available. Coverage B (Personal
Property) covers personal property owned by an insured anywhere in the
world, subject to a limit of 10 percent of the Coverage B limit.
However, two exclusions exist. One is for theft of personal property
while located at any residence owned by the insured other than the
residence covered on the policy, except while the insured is living
there. If the insured is not residing there, I would say there is an
argument that coverage is provided, otherwise separate insurance
providing theft coverage may be in order.
A second exclusion addresses building materials and supplies that
will become a part of the structure, unless they are situated at the
residence premises described in the declarations. So, if the supplies
are at your present home, they are covered, but once at the site, you
should have them covered under the builder's risk policy.
Liability coverage for bodily injury or property damage that occurs
at the job site, if it is an insured location or arises out of
construction activities, is provided in the liability section of the
homeowners policy. The important caveat is that the definition of an
insured location includes land owned by an insured on which a one- or
two-family dwelling is being built as the insured's residence. If the
construction is a barn or a tenant dwelling, then separate coverage must
be purchased.
What about the employee or contractors working at the site? The
homeowners policy is not concerned with their status as employee or
contractor. The policy does not exclude injury to an employee, unless
the employee is eligible to receive benefits provided by an insured
under any workers' compensation law. If the insured property owner,
acting as contractor, chooses to buy workers' compensation insurance,
that policy will take precedence and provide additional remedies such as
the removal of the ability to be sued for negligence. Without such
coverage, the homeowners policy will respond under Coverage D (Medical
Payments to Others) and will defend the insured in a lawsuit and pay any
judgment or settlement arising out of the worker's injury up to the
limit of Coverage C (Personal Liability).
There are many ways the homeowners liability coverage can be
triggered and depended upon. Increasing this limit costs only a modest
amount and is well worth it. If only we could come up with insurance to
provide me assurance that my wife will stay satisfied in our current
home for 20 years or so, then we would have something! If you will
excuse me, I have to go paint the bedroom.
Russell Janecka is a Certified Insurance Counselor. He is the owner of Janecka Insurance Agency in Victoria, and serves on the board of directors with Germania Insurance Companies. (361) 573-4475 e-mail: info@jiavic.com
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