Hiring a contractor with expired insurance or a bond can expose you to significant financial and legal risks during your remodeling or construction project. Insurance and bonding are critical safeguards that protect homeowners in case of accidents, property damage, or incomplete work. If you discover your contractor’s coverage is no longer valid, it’s essential to act quickly to protect yourself and your investment.
Here’s what you should do to address the issue, minimise risks, and get your project back on track.
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Why Insurance and Bonding Are Essential
1. Insurance
- General Liability Insurance: Protects against property damage and injuries caused by the contractor’s work.
- Workers’ Compensation Insurance: Covers medical expenses and lost wages for workers injured on the job.
2. Bonding
A contractor bond is a financial guarantee that the contractor will complete the project according to the terms of your contract. If they fail to do so, the bond compensates you for losses.
Steps to Take If Your Contractor’s Insurance or Bond Has Expired
1. Stop Work Immediately
If work has started, pause the project until the contractor resolves the issue. Continuing without proper coverage exposes you to liability for accidents, property damage, or incomplete work.
2. Verify Coverage
Ask your contractor for proof of insurance and bonding. If the documentation is expired, request updated certificates directly from their insurance or bonding provider.
- Red Flag: If the contractor cannot provide updated proof of coverage, it may indicate financial instability or a lack of professionalism.
3. Contact Their Insurance or Bonding Company
Verify directly with the insurer or bonding company that the contractor’s policy or bond has been renewed or reinstated.
- What to Ask:
- Is the contractor currently insured or bonded?
- What does the policy cover?
- Are there any lapses in coverage?
4. Require Updated Coverage Before Proceeding
Do not allow work to resume until the contractor provides active and valid insurance and bonding. If they cannot or refuse to renew their coverage, consider terminating your agreement.
5. Consult a Lawyer
If the contractor refuses to address the issue and you’ve already paid for work, consult a construction attorney to understand your rights and options.
- Example: Oregon law requires contractors to maintain active bonding and insurance to protect homeowners. You may be able to file a complaint with the Oregon Construction Contractors Board (CCB).
6. Report the Contractor
If the contractor is unresponsive or unwilling to renew their coverage, file a complaint with the Oregon CCB. Operating without valid insurance or bonding is a violation of state law.
- File a Complaint: Oregon CCB Complaint Process
Potential Risks of Expired Insurance or Bonding
1. Financial Liability
Without valid insurance, you could be held responsible for:
- Injuries to workers on your property.
- Property damage caused by the contractor.
2. Incomplete or Poor-Quality Work
If the contractor is not bonded and fails to complete the project, you may not have financial recourse to recover losses.
3. Legal Violations
In Portland, contractors are required to carry active insurance and bonding to comply with state regulations. Hiring a non-compliant contractor could result in fines or penalties.
How the Portland Preconstruction Process Could Have Prevented This
The Portland Preconstruction Process is designed to vet contractors and ensure they meet all legal and professional requirements before starting your project.
Steps in the Process
- Initial Vetting: Verify that contractors are licensed, insured, and bonded through the Oregon CCB.
- Contract Review: Ensure agreements include clauses requiring valid insurance and bonding throughout the project.
- Ongoing Monitoring: Confirm that coverage remains active during the project timeline.
How to Move Forward
Option 1: Require Immediate Renewal
If you want to continue working with the contractor, insist they renew their insurance or bonding before proceeding. Confirm coverage directly with their provider.
Option 2: Terminate the Contract
If the contractor is unwilling or unable to provide proof of coverage, consider terminating the contract. Consult a lawyer to ensure termination complies with the terms of your agreement.
Option 3: Hire a New Contractor
Find a licensed, insured, and bonded contractor to take over the project. Use resources like the Oregon CCB to verify credentials before signing a new contract.
Case Study: A Portland Remodel Gone Wrong
The Problem
A homeowner in Portland’s Sellwood neighborhood hired a contractor for a bathroom remodel, only to discover mid-project that their insurance had expired. During the remodel, a worker was injured, leaving the homeowner liable for medical expenses.
The Solution
The homeowner terminated the contract and hired a licensed contractor through the Portland Preconstruction Process. The new contractor provided proof of active insurance and bonded coverage, completing the project without further issues.
The Lesson
Verifying insurance and bonding upfront is critical to avoid financial and legal risks.
Resources for Portland Homeowners
- Oregon Construction Contractors Board (CCB)
Verify Contractor Licenses and Coverage - Portland Bureau of Development Services
Permits and Code Compliance - Consumer Financial Protection Bureau
Tips for Hiring Contractors
Conclusion: Protect Yourself from Expired Insurance or Bonding
If your contractor’s insurance or bond has expired, act immediately to pause work and address the issue. Proper insurance and bonding are essential safeguards that protect you from financial and legal risks. Leveraging the Portland Preconstruction Process ensures you hire qualified professionals and avoid these problems from the start.Contact us today to learn how we can guide your project with vetted contractors, clear planning, and peace of mind. Let’s ensure your remodel is safe, compliant, and stress-free!
