In reality, workman’s compensation and liability insurance protect the homeowner as well as the contractor. If you hire a contractor who does not carry workman’s compensation and one of his employees gets hurt, the employee can sue you. If your contractor has workman’s compensation, the insurance will cover his injuries. If the contractor does not carry liability insurance and your property was damaged, you would have to sue him to recover your damages. Also if your property is damaged for some unforeseen reason, the contractor’s liability insurance would cover the damages.