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  1. #1
    Join Date
    Apr 2011
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    145

    Default Contractor is Bonded but Doesnít Have Liability Insurance

    My question involves insurance law for the state of: CA

    Iím interviewing electricians to install chandelier in my house. There is this one electrician who says he has a bond that covers $15,000 but he does not have insurance. He explained to me that bond covers small amounts whereas insurance cover large amounts like $100,000 plus. I looked up the difference and this is the article I found

    https://www.angieslist.com/articles/hiring-contractor-whats-difference-between-bonded-and-insured.htm

    It seems like insurance protects my house in case the electrician damages it during the work. letís just say he installs the chandelier and in the future the chandelier drops and it breaks. Would he be responsible or covered to replace the chandelier under the bond assuming the chandelier is less than $15,000?

  2. #2
    Join Date
    Jan 2006
    Posts
    38,162

    Default Re: Contractor That Has Bond but Doesnít Have Insurance

    It all depends on what the bond covers. A bond, in simplest terms is little different than an insurance policy. Just like an insurance policy, you purchase it to cover some specific issue. In construction a bond is used in more than simply liability issues.

    There is a performance bond. That would pay when the contractor doesn’t complete the contracted work. In commercial and industrial construction a bid bond is often required. That is basically so a contractor doesn’t pull his bid.

    If this contractor has a liability bond, then that would cover the contractors liabilities but realistically, $15,000 is such a small bond it would concern me. If he caused your house to burn down, you would be poorly compensated if all you could get his bond.

    or, if his work caused a person to be injured, again, $15,000 wouldn’t go far

    or, an more odd situation; if the guy doesn’t pay his supplier and they file for a lien against your property

    So, if you do consider moving forward, you need to know what his bond is actually for.

  3. #3
    Join Date
    Dec 2018
    Posts
    168

    Default Re: Contractor That Has Bond but Doesnít Have Insurance

    The basic $15,000 bond a CA contractor carries is very different than liability insurance he would carry. A bond will cover only the work that is performed up to completion. It would reimburse a client if the contractor walked off with a deposit, did not finish a job or botched a job and refused to fix it, etc. Liability insurance will cover the contractor if his ladder fell on the customer's car, if he burned down the house, flooded the house, or in this instance, if the chandelier fell on someone and injured them.

    An electrician without liability insurance would raise an eyebrow to me because it is a very dangerous trade with big consequences. If the chandelier is of substantial weight or value you'd want a pro, probably with insurance, to properly mount it. Wiring is the easy part.

  4. #4
    Join Date
    Apr 2011
    Posts
    145

    Default Re: Contractor That Has Bond but Doesnít Have Insurance

    Quote Quoting Chuck77
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    The basic $15,000 bond a CA contractor carries is very different than liability insurance he would carry. A bond will cover only the work that is performed up to completion. It would reimburse a client if the contractor walked off with a deposit, did not finish a job or botched a job and refused to fix it, etc. Liability insurance will cover the contractor if his ladder fell on the customer's car, if he burned down the house, flooded the house, or in this instance, if the chandelier fell on someone and injured them.

    An electrician without liability insurance would raise an eyebrow to me because it is a very dangerous trade with big consequences. If the chandelier is of substantial weight or value you'd want a pro, probably with insurance, to properly mount it. Wiring is the easy part.
    Iíve had an electrician come who said he isnít even licensed. I wonít be using him.

  5. #5
    Join Date
    Jul 2018
    Posts
    1,061

    Default Re: Contractor That Has Bond but Doesnít Have Insurance

    Quote Quoting jyeh74
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    It seems like insurance protects my house in case the electrician damages it during the work. let’s just say he installs the chandelier and in the future the chandelier drops and it breaks. Would he be responsible or covered to replace the chandelier under the bond assuming the chandelier is less than $15,000?
    I didn't read the article you linked, but I can explain the difference between a contractor's license bond ("CLB") and insurance.

    A CLB is for the benefit of, among others, "[a] homeowner contracting for home improvement upon the homeowner’s personal family residence damaged as a result of a violation of this chapter by the licensee." Cal. Bus. & Prof. Code section 7071.5(a). The trick with any license bond claim is proving "a violation of this chapter," which means a violation of Chapter 9 of Division 3 of the Business and Professions Code (commencing with section 7000, and commonly referred to as the Contractors' State License Law). Probably the most common violation is section 7109: "A willful departure in any material respect from accepted trade standards for good and workmanlike construction."

    Insurance, on the other hand, exists for the protection of the insured contractor. The scope of commercial general liability insurance will vary, but it's possible that there could be overlap between something that is covered by the bond and something that is covered by insurance.

    You can check a contractor's license and bond status at this link.

  6. #6
    Join Date
    Nov 2015
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    47.606 N 122.332 W in body, still at 90 S in my mind.
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    Default Re: Contractor That Has Bond but Doesnít Have Insurance

    As a former PM for a large electrical contractor and a Master electrician my advice is simple; don't hire a contractor who is not licensed, bonded and insured. Also, don't assume that the bond is large enough to be meaningful.
    "Where do those stairs go?"
    "They go up!"

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