The certificate of insurance (COI) is the single document that separates homeowner protection from homeowner liability. A contractor with current, adequate insurance: damage to your property during the job is covered by their liability carrier, injury to their workers on your property is covered by workers' comp, your homeowner's policy is not implicated. A contractor without insurance: every risk defaults to you. Homeowner's insurance typically does not cover damage caused by contractor negligence; homeowner's insurance sometimes covers worker injuries but with significant limits and potential liability exposure to you. Insurance verification is the second most important vetting step after licensing, and for similar reasons.
This guide is part of the Know Before You Hire series. At Home Services Co, COIs are available within 24 hours as standard practice — never a special request.
The three insurance types that matter. General Liability (GL): covers damage to your property during contractor work (broken window, damaged hardwood floor, water damage from plumbing error). Minimum coverage $1M per occurrence for most residential work; $2M for larger projects. Workers' Compensation: covers the contractor's employees if injured on your property. Required in most states for any contractor with employees. If the contractor uses subcontractors, workers' comp on the subs also matters. Commercial Auto: covers the contractor's vehicles and drivers. Less directly relevant to your property but still matters for completeness.
What a legitimate COI looks like. ACORD form 25 is the industry standard certificate format. It lists: the insurance carrier name, the policy number, policy dates (effective and expiration), coverage limits, and the named insured (who is covered). A legitimate COI addressed to your property lists you as a certificate holder — meaning the insurance carrier will notify you if the policy changes or cancels during the job.
Step-by-step verification. Step 1: ask for COI addressed to your property. Step 2: when received, verify the carrier name by searching the carrier's website to confirm they exist. Step 3: call the insurance agent listed on the COI directly — not a number the contractor provides. Step 4: confirm with the agent that the policy is current, coverage limits match what's shown, and the contractor is listed as the named insured. Step 5: for larger projects, confirm that the policy covers the specific type of work being performed (some policies exclude certain trades or activities).
Why calling the carrier directly matters. Fake COIs are common — Photoshop and desktop publishing make convincing forgeries trivial. A contractor can provide a COI that looks perfect but references an expired policy, a policy for a different company, or a policy that doesn't exist. The only verification that catches these is calling the carrier and confirming the policy's current status. The 10 minutes this takes is cheap insurance against the scam.
The 'additional insured' option. For larger projects, you can ask to be named as an 'additional insured' on the contractor's policy for the project duration. This provides direct claim rights rather than requiring you to sue the contractor to trigger their insurance. Large commercial projects always do this. Residential projects of significant scope ($20,000+) should consider it. The contractor's insurance agent adds you to the policy for a nominal fee. See hiring a general contractor.
Workers' comp specifics. Workers' comp is the most often-missing insurance. Some independent contractors operate as 'solo' operations without workers' comp because they claim to have no employees. This is sometimes genuine and sometimes a fiction — the 'solo' contractor shows up with helpers who are treated as employees but carry no coverage. If a 'solo' contractor shows up with assistants, ask specifically how they're covered. An injury to an uninsured helper on your property can become your liability.
Red flag #1: COI not addressed to you specifically. A COI addressed to the contractor's previous customer or as a generic one-off is not coverage for your job. Legitimate COIs are addressed to the current customer.
Red flag #2: COI with expired dates. Check effective and expiration dates. An expired COI is no coverage.
Red flag #3: refusal to provide COI. 'I don't have that on hand — can I just email it later?' A legitimate contractor produces COIs as a standard operational capability. Delay usually indicates the COI doesn't exist as claimed.
Red flag #4: COI not matching company name or licensee. The insured entity on the COI should match the company and/or licensee you're contracting with. Mismatches suggest borrowed COIs or fictitious business identity.
Red flag #5: low coverage limits. $500,000 GL might be inadequate for a significant renovation. Industry-standard minimum for residential is $1M; larger projects should have $2M or more.
Red flag #6: no mention of workers' comp on a contractor with employees. This is specifically illegal in most states.
The certificate holder vs additional insured distinction. Being a 'certificate holder' means the carrier will notify you if the policy changes. Being an 'additional insured' means you are directly covered under the policy for the project. Additional insured status is more protective but requires specific endorsement. For routine residential service, certificate holder is usually sufficient. For major renovations, additional insured is worth requesting.
Subcontractor coverage. If the contractor uses subs, the subs need their own insurance — not just the general contractor's. A plumbing sub without plumbing liability coverage creates liability gaps. On larger projects, verify that the GC requires COIs from all subs and can produce them on request.
Homeowner's insurance doesn't cover contractor negligence. Many homeowners assume their homeowner's policy will cover anything that goes wrong. Generally, it doesn't cover damage caused by contractor actions during authorized work — that's the contractor's liability. Your homeowner's insurance may cover some scenarios (fire damage caused by contractor error, for example) but with significant deductibles and potential for insurance to then pursue the contractor. Don't rely on homeowner's insurance as your primary contractor-damage protection.
The insurance lapse during your project. Insurance policies can lapse mid-project — contractor stops paying, carrier cancels. A certificate holder designation on the policy means the carrier notifies you of changes. Without that designation, you don't know if the insurance has lapsed until something goes wrong. For projects running multiple months, insurance lapse is a real risk.
What happens when damage occurs. Document with photos immediately. Notify the contractor in writing. Notify the contractor's insurance carrier directly (using the COI information). Do not agree to out-of-pocket settlement before filing with insurance — the contractor may offer to 'just handle it' to avoid an insurance claim, and their offer is often inadequate. Insurance exists to handle claims properly; use it.
Liability waivers the contractor wants you to sign. Some contracts include language waiving the contractor's liability for various scenarios. Read these clauses carefully. Courts often don't enforce broad liability waivers on consumer contracts, but a well-drafted waiver can reduce your recovery. A contract that transfers most liability to the homeowner is a red-flag contract. See spot a bad contract.
The cost of hiring uninsured. The uninsured contractor's bid is cheaper because they're not paying insurance premiums — which cost $5,000-$25,000+ annually for a residential contractor. That savings is transferred to the customer in lower prices. But the customer is now the insurance backstop. A single property damage claim — $5,000 for a flooded basement, $20,000 for an electrical fire, $100,000+ for a worker injury lawsuit — wipes out decades of 'savings' from cheaper bids.
Event-based insurance. Some contractors supplement standard GL with specific event coverage (e.g., builders risk insurance for significant construction). For large renovation projects, ask about builders risk specifically — it covers the project itself during construction (materials, work in progress) in ways standard GL doesn't.
The summary. Insurance verification costs 10-15 minutes and involves calling the carrier directly to confirm policy status. It catches fake COIs, expired policies, and coverage gaps. The combination of license verification + insurance verification catches the majority of the worst-outcome contractor situations before signing.
At Home Services Co, we carry full GL, workers' comp, and commercial auto coverage — and provide COIs within 24 hours as standard practice. Related: verify license, insured vs bonded vs licensed, 12 red flags, insurance during renovation, pricing, book, or the full series.