Determining the appropriate risk level in certain professions can be challenging, and yet it is a critical aspect to ensuring your client has the correct coverage. One profession that causes a lot of confusion because of significant overlap in job descriptions is in the area of home repair. Do you know how to quickly determine if you’re insuring a general contractor, a remodeler or a handyperson?

Here are 5 questions to ask to discover the correct risk category:

  1. Are they licensed? One quick way to ascertain the correct category is to find out if they are licensed in a particular trade, such as an electrician or a plumber. If so, this person may be a remodeler or a general contractor, while a handyperson generally does not have any specific trade license.
    • Another question you can ask to put your client into the correct risk pool is what type of project do they typically work on, and how much are their sales.
    • A handyperson typically is involved in small residential projects, with a gross sale of less than $1500.00. Rarely will a handyperson be involved in commercial work.
    • A remodeler generally will take on either residential or commercial repair/remodeling projects with gross sales of more than $1500 per project.
  2. Are the involved in the entire process? General contractors are involved with either residential or commercial projects and can include new construction or repair/remodeling. They will be involved in ground-up construction. Gross sales tend to be much larger.
  3. Do they hire subcontractors? Next, you’ll want to determine if your client has employees or uses subcontractors. A handyperson is going to be a small business with at most two employees in addition to the owner(s). In comparison, a remodeler will most likely have more than two employees, plus the owner(s). Occasionally you will find remodelers who subcontract out a majority of their work, but typically they will be doing a lot of the work themselves.  General contractors, on the other hand, frequently subcontract out 100% of their operations. You can expect a general contractor to have clerical employees in addition to the owner(s), and the remainder of their workforce will be subcontractors.
  4. Do they handle new construction? Your handyman is not going to be doing new construction work. A remodeler might be involved in new construction if they are hired for an addition to an existing building. A general contractor is frequently working on new construction.
  5. How do they handle roofing jobs? A handyman will only be involved with some patching repairs that may occur in tandem with non-roofing work on a particular project. A remodeler will provide roofing services as part of a remodel or repair project.  This will require separate classification. General contractors provide roofing services that are part of a subcontracted operation, or is separately classified.

While this article doesn’t cover every scenario and certainly is not a replacement for underwriting guidelines, these five questions will give you a quick overview to determine where a risk will fit the best.