Thread: Workers Comp Insurance

For the 2nd time in two months had a client want me to inspect their "new construction" home. Builder gave the client a legal document that had to be both signed and notarized by me that I carry Workers Comp and have provide proof of this insurance as well as proof of my vehicle insurance and proof of general liability insurance. Builder told the client the he was more than welcome to have the home inspected ONLY if he could find an inspector with all 3 types of insurance.

Lots of luck here in Texas. I don't know of any inspectors carrying workers comp. Is this becoming a problem more and more now for inspectors. Seems the builders must know inspectors don't carry this type of insurance and use this "legal" requirement as a roadblock to prevent the client getting his home inspected.

Told my client to either contact his attorney as to the validity of the builders requirement or tell the builder he's not moving forward with the purchase of the home until the builder waives that requirement. I also asked my client what the builder was trying to hide by making it so difficult to inspect the home?

Anyone else run into this situation?

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The builder has the right to require someone working on his property to carry WC and general liability in$urance, as for auto in$urance, I don't think so. Your buyer also has the right to walk away.

I have WC on myself. I hire myself through a payroll service (temporary service), the payroll service pays WC, SSI, unemployment, an I pay all taxes just as any employee would, in addition I pay the payroll service a fee for processing. The total cost to me is 32% more than what I am paid. This way I am covered by WC if I am injured, or if I am asked for proof of WC. I also pay SSI, state and federal taxes every week so at year end I don't sweat it.

Not yet.
Was it the same builder?
Why the vehicle insurance? Do you park in the driveway?

In most states you can not even get workers compensation insurance with less them 2 employees. In those states you should be able to get an exemption certificate.

The vehicle insurance is a joke. Make a copy of your state insurance ID card.

It is just a stalling tactic and they work most of the time. The boulders know if they make if difficult that most will not fight it. You need to get the buyer to ask the builder for a copy of all of their insurance as well. Builders Risk and Liability would be a good start, just in case someone gets hurt or the home has a problem after if closes.

I forwarded a copy of the builders "required" addendum to my attorney for review. Mind you, I have no intention of jumping through builders hoops to do an inspection. I'm certainly not going to run around trying to get their forms Notarized either! What nonsense! Also, Texas is one of the few states that does NOT require Workers Comp. Nice to have maybe, but certainly not required and I don't know of any inspectors here who bother to mess with it.

I emailed a copy of the builders addendum to my attorney for his thoughts, the response was:

"With regard to your question about new home inspections, the insurance provision in the addendum is clearly an attempt by the builder to prevent the home from being inspected. I’m sure the Texas Residential Construction Commission would like to know that builders are putting this provision in their contracts. The problem is that a buyer may have already signed the addendum when they contact you. So rather than being able to negotiate the addendum up front, the buyer will be in the position of trying to get the builder to amend the addendum.

If a buyer came to me with a signed addendum such as the one Taylor-Woodrow is using, I am fairly certain I could get the builder to amend it and take out the worker’s compensation requirement. Generally, a provision that is impossible or commercially impracticable is not enforceable. Since most inspectors do not carry worker’s compensation insurance, it would be impracticable, if not impossible, for a buyer to find an inspector who does carry worker’s compensation insurance. My suggestion would be to tell the builder this and politely request that he amend the addendum.

If a builder still refuses to remove the WC insurance requirement, there are more drastic measures that can be taken. The buyer could always get a declaratory judgment from the court stating that the provision is unenforceable. A party to a contract who is forced to obtain a declaratory judgment is entitled to recover his or her attorney’s fees incurred in obtaining the declaratory judgment. Hopefully, it would not come to this because if it did, the good working relationship between the buyer and builder would likely be out the window.

I am not sure how often you run it to this problem, but feel free to give the buyer my phone number and I can discuss their options in more detail with them."

Anyways....Since this is a fairly rare occurrence I'm not going to spin my wheels too much, but I am going to forward the builders addendum to the TRCC and file a complaint with them that the builder is undermining the buyers right to obtain a fair inspection. Left unchecked builders may try using this tactic more and more.

Good job Ken.

The way I solved that is: 1) at least in Florida, if you are an officer of the corporation you can elect to be Exempt from Worker's Compensation, which I and most home inspectors did; 2) I carried $1M coverage on my vehicle; 3) I carried $2M GL. Most inspector complained and did not do 2) and 3).

However, a few other inspectors did 2) and 3) also, then, when our clients came to us with that request, we simply gave them the paperwork and the builder was stuck letting us on.

Instead of fighting it and whining about it, I used it to my advantage and obtained A LOT of work from doing that. And that work was nice work, in new construction, and I even ended up doing quality control inspections for some of those builders.

My recommendation is to not fight every thing you dislike, if given lemons, make lemonade - it really tastes great.