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If the person does not have a valid company, then that person would not have worker's compensation. The homeowner can be liable for any damages suffered by someone they employ to do work on their property. Most insurance policies will not cover this type of claim (although the policy should be reviewed to determine if there is any coverage)
If there is no coverage, then before paying any money, it is best to have an attorney draft a release- basically a statement stating that the settlement is in exchange for a full release and that the individual waives any and all rights to any additional recovery in the future.
That is the standard practice when someone voluntarily accepts responsibility for an injury.
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