Do homeowners insurance policies typically have an exclusion for poor workmanship by a contractor? How about an unlicensed contractor?
This person* knowingly hired an unlicensed contractor to do major work and is now feeling the burn.
:smack:
- Not me
My girlfriend was in the insurance biz for twenty years she says:
-If the contractor is licensed, he will be insured and will have a contrator’s bond. Your remedy is against him.
-If the contractor is not licensed, you have no remedy against your insurance company. You could personally sue the unlicensed contractor for any assets he might have. Good luck with that.
What kind of damage are we talking about? Something that should be covered by a home warranty, like walls that are falling apart, would be one thing; a fire in your house due to poor electrical work might be a different story. Most likely your friend is SOL.
Might be able to sue the guy, though.
Generally, I think it was an add-on to a house and the whole roof has to be re-done, and maybe more … yet to find out.
She intends to sue the guy, but I didn’t know whether homeowners is likely to pay or deny (based upon typical policies as I am not yet familiar with her specific policy).
Can’t speak for the insurance end, but it is important for homeowners to verify things which are in their interest. For example: I always secure permits (when required) on behalf of my customer and properly display them. I also schedule inspections as required and keep record of them, because I’ve had municipalities with crappy recordkeeping come back to me a year or so down the road alleging I didn’t do things correctly. That said, not all contractors are diligent with records, pull permits when required, or schedule necessary inspections.
If the workmanship was for shit, and needs to be redone, that is not an insurance issue. If on the other hand, the piss poor wiring caused a fire, the insurance would pay. The insurance company would then go after the contractor.
My understanding is that, other than the shoddy work itself, there is no damage as a consequence of the shoddy work. The shoddy work has to be re-done to avoid future potential damage (anticipated eventual roof leaks, etc.).
In other words, the shoddy work is currently holding up but is not made to be durable enough to last for too long.
Based upon that, and the responses above, it appears the insurance is likely to deny any claim. Thanks.
What he said. Insurance may pay for the damage caused by the poor workmanship, but it will not pay to correct the problem. Which I think is a little dense (Not gonna pay $500 to correct the leaky new roof, but WILL pay for the $5,000 resulting water damage) but I can see their point. Sorta.
Did someone get (aka “pull”) a permit for this work, and was the completed work inspected?
I’m not familiar with the specific laws in Sacramento County offhand, but your friend is probably looking at a big pile of pain if the work was done without a permit. At best, their insurance company may disallow any claims related to the work - no coverage for fire damage, water leaks, etc. that might damage the addition, or were caused by the addition. At worst, the county may require the addition be removed. (Be sure to pull a permit for the demolition!) Then, your friend would have to start all over again with a permit and a reputable contractor.
At a minimum, the un-permitted work will mess with their home’s assessed value. Some friends of ours in Monterey County are having fits because the previous owner of their house built an addition without a permit. In the eyes of the assessor, it simply does not exist, so that lowered their home’s value, which interfered with their ability to secure a home equity loan. Ironically, they wanted to use the loan to bring the addition up to code and make it legal.
cite? When I was a licensed agent in California there was no such exclusion in a homeowners policy form.
I doubt it has changed since.
Are you sure you have the whole story? Permits are important, but generally not for this reason. Homeowners usually want to keep the assessed value of their home down because that’s the value upon which property taxes are based. If you want to get a loan, you’ll need an appraisal. An appraiser might (but probably would not) reduce the value if the work wasn’t permitted; a tax assessor probably would not. One of the purposes of work permits is to permit the municipality to reassses the property value once the work is done. http://www.co.monterey.ca.us/assessor/supplemental.htm Giving the homeowner a reduced value based on failure to pull a permit actually rewards the misconduct.
While it is unlikely to happen, should your insurance company visit your friends property to update their records and notice the substandard work, they have every right to cancel the policy to avoid the subsequent damage claim that’s sure to follow.
Gah… I swapped assessor for appraiser.
I have no idea if anything was done with my friends’ assessed value for property taxes, but the appraised value took a hit vs the purchase price, and they wound up with insufficient equity to qualify for an equity loan to fix the addition.
Why this wasn’t disclosed as an unwarranted or un-permitted addition when they bought the property has been a source of contention.
That’s why I said “may” as opposed to will. And in the spirit of being generic, it is possible that other states do have such exclusions. It’s definitely something that warrants a careful read of one’s policy.