Insurance for Connecticut Home Improvement Contractor Registration: What the State Requires vs. What Clients Require

Every few weeks I get a call from someone in Bristol, Plainville or New Britain who is about to register as a home improvement contractor and wants “whatever insurance the HIC requires.” The short answer is that Connecticut asks for very little. The longer answer is that almost nobody you work for will accept that little.

What the state actually requires

Home improvement contractor registration runs through the Connecticut Department of Consumer Protection. If you do remodeling, repair or improvement work on residential property, you generally need to be registered before you take the job. Here is what registration requires on the insurance side.

• General liability of at least $20,000. That is the minimum limit the state wants to see. Twenty thousand dollars.
• A $220 application fee.
• No surety bond. I want to be clear about this because I get asked constantly. There is no HIC bond requirement in Connecticut. If someone told you that you need to “get bonded” to register, they are thinking of a different state or a different license. Connecticut has a guaranty fund that homeowners can claim against instead, which is not something you buy.
• Jobs under $200 are exempt from registration altogether.

That is the whole list. It is a low bar on purpose. Registration is a consumer protection tool, not an insurance program.

Why $20,000 is a floor, not a plan

Think about what a general liability claim looks like on a residential job. You are replacing a bathroom in a colonial in West Hartford. A supply line you connected lets go over the weekend. Water runs through the ceiling into the kitchen and down into a finished basement. Hardwood floors, cabinets, drywall, the homeowner’s belongings, a few weeks in a hotel while it dries out. That is easily a tens-of-thousands-of-dollars claim before anyone argues about it, and it is one of the most common claims in the trade.

Now picture the injury side. A visitor trips over your materials in the driveway and breaks a wrist. A ladder falls on a parked car. A fire starts from a heat gun. Each one blows through $20,000 before the lawyer’s first letter.

A $20,000 policy pays the first $20,000 and you owe the rest personally. Since most of the contractors I talk to are sole proprietors or single-member LLCs with a truck and a house, “the rest” comes out of your life. That is what I mean when I say the state minimum is a floor. It gets you registered. It does not protect you.

What clients actually ask for

This is where the real requirements come from, and they are consistent.

General contractors. If you sub for a GC, their contract will have an insurance section, and it will say $1 million per occurrence and $2 million aggregate. It will also ask to be named as additional insured, often with primary and non-contributory wording and a waiver of subrogation. No certificate showing all of that, no start on Monday. More on the contractor insurance page.

Homeowners. Ten years ago most homeowners never asked. Now, on any job of size in Avon, Simsbury or Farmington, they ask for a certificate and they read it. Some have been coached by their own agent to look for $1 million limits. Either way, a $20,000 policy looks like what it is.

Towns. Building departments in Farmington, Avon, Simsbury, West Hartford and elsewhere may ask for a certificate before issuing a permit, and some name the town as certificate holder. They are not looking for the HIC minimum either.

Property managers and condo associations. Same story as GCs, sometimes with higher limits and a requirement that you carry workers’ comp whether or not you have employees.

The practical result is that the policy nearly every home improvement contractor in Connecticut actually buys is a $1 million/$2 million general liability policy. For a sole proprietor doing painting, carpentry, tile or general remodeling, that often costs under $1,000 a year. The difference between that and a $20,000 policy is small in premium and enormous at claim time. Here is what general liability covers in more detail.

Workers’ comp the moment you hire

Connecticut requires workers’ compensation for every employer with employees. There is no headcount threshold and no grace period. The day you put a helper on payroll, even part time, even a nephew for the summer, you need a policy.

If you have no employees, the state does not make you carry it, and as a sole proprietor you can elect coverage for yourself or not. But GCs and many property managers will require a policy or a signed waiver, and the waiver is a hassle every time. Most sole proprietors I work with who sub regularly carry a minimum policy because it is simpler. Details on the workers’ compensation page.

One more thing. If you pay subcontractors who cannot show their own coverage, their payments typically get added to your payroll at audit and charged to your policy. Collect certificates from your subs.

Registration is not a license

People mix these up. HIC registration is what a general remodeler, painter, carpenter, sider or handyman needs to work on homes. It involves the fee, the $20,000 GL and a form. It does not test your skills.

Electricians, plumbers, HVAC technicians and a number of other trades are licensed, not registered. Licensing runs through a different part of DCP, involves exams and experience requirements, and has its own rules about insurance and, in some cases, bonds. A licensed electrician who also does general remodeling may need both.

The bond question, one more time

Connecticut does not require a surety bond for home improvement contractor registration. You may still run into bonds elsewhere. Some towns require a permit bond for work in the public right of way. Public construction contracts over $100,000 require payment bonds. Some trade licenses carry a bond. But “HIC bond” as a thing you need to register is a myth, and if a website is trying to sell you one, close the tab. Here is what a surety bond in Connecticut actually is and when you need one.

Certificates: the part that keeps you working

Once you have a real policy, the day-to-day is certificates. The GC’s office emails at 3:00 with the wording they need. The homeowner wants one before the deposit. The town wants one for the permit. At my agency that is a phone call or email and the certificate goes out the same day. More on certificates of insurance.

What to do

If you are registering as a home improvement contractor in Connecticut, buy the $1 million/$2 million general liability policy from the start, not the $20,000 one. Add workers’ comp the day you hire. Get tools and equipment coverage if you have more than a few thousand dollars in the truck. Keep a folder of your certificates and your subs’ certificates.

I write this coverage for contractors across Bristol, Plainville, New Britain, Farmington and the rest of Hartford County every week. Call (860) 672-1733, send a note, or email brandon@thebeamagency.com with your trade and rough annual revenue, and I will quote it.