Verify Contractor License
Checklist for Prescreening Contractors
- Hire only Licensed Contractors
- Check each contractor's license status
- Get Three References and review past work
- Research contractors and fill in contact information here
Understanding the difference between a general and specialty contractor.
General building contractors usually oversee projects and coordinate the specific licensed subcontractors for a job. Specialty or subcontractors are usually hired to perform a single job. For example, if you want only roofing or plumbing work, you may want to hire a contractor licensed in that particular specialty.
A general building contractor may also contract for specialty work, but must hold a specialty license for that work or actually have a specialty contractor do the work. The only exception is if the job requires more than two types of work on a building. Then it is appropriate for a licensed general building contractor to contract for and oversee the entire project. For example, if your kitchen remodeling will involve plumbing, electrical and carpentry work under one contract, you should hire a licensed general building contractor. Under these circumstances, a general building contractor may perform all of the work on a building, or subcontract parts of the job to contractors with specialty licenses.
Be advised that unlicensed individuals pose a risk to you and your family's financial security. They expose you to significant financial harm in the event that a worker is injured while on your property, if your property is damaged, if the work is incomplete and/or faulty. Few, if any, unlicensed individual has bonding or workers' compensation insurance. The quality of their work usually doesn't compare to that of a licensed contractor. Don't take the chance in order to save a few dollars. You'll probably end up paying more in the long run.
How do I find the right licensed contractor?
This step highlights some of the different things you can do to help you find the right licensed contractor.
Make sure the contractor is licensed.
All contractor advertisements, whether it be an ad in the phone book or newspaper, a flyer that shows up at your front door, or the company's name on the side of a truck, must have the contractor's state license number.
REMEMBER Most licensed contractors are competent, honest, hardworking and financially responsible. However, most of the problems could be prevented if homeowners knew their home improvement rights and took responsibility for their project. A responsible and informed consumer can work more effectively with reputable contractors, and can avoid being victimized by unscrupulous or unlicensed operators.
Shop around before hiring a contractor.
Get at least three written bids on your project, and make sure you're comparing bids based on identical plans, specifications and scope of work. Do not automatically accept the lowest bid. In fact, you should beware of any bid that is substantially lower than the others. It probably indicates that the contractor made a mistake or is not including all the work quoted by his or her competitors. You may be headed for a dispute with your contractor if you accept an abnormally low bid. It is also possible that this contractor will cut corners or do substandard work in order to make a profit on the job.
When the contractor comes to your house to give you a bid, ask to see their pocket license, along with a picture I.D. You want to make sure the person you're dealing with is the same person on the license.
Contractors can also hire salespeople to work for them. Those people must be registered with the state board. Ask to see their registration card, along with a picture I.D.
REMEMBER Contractors are required to have their license number on their business card and on all bids and contracts. Seeing the number there doesn't necessarily mean the license is valid. Check the license status. Although an unlicensed operator may give you a low bid, the risks of possible financial and legal consequences you may face outweigh any benefits a lower bid may seem to offer.
Ask for personal recommendations.
Friends and family may have recently had similar projects completed. If they are satisfied with the results, chances are you will be too. Other good reference sources include local customers, material suppliers, subcontractors, and financial institutions to check whether the contractor is financially responsible. If you are still unsure, you may also wish to check the contractor out with your local building department, trade association or union, consumer protection agency, consumer fraud unit, and the Better Business Bureau.
Verify the contractor's business location and telephone number.
A contractor who operates a business out of the back of a pickup truck with a cellular telephone may be difficult to find to complete a job or fix something that has gone wrong after the last bill is paid. You can find a licensed contractor's "address of record" on this website when you look up their license status.
Verify the contractor's workers' compensation and commercial general liability insurance coverage.
Ask to see a copy of the certificate of insurance, or ask for the name of the contractor's insurance carrier and agency to verify that the contractor has the insurance.
In some states, if a contractor has employees, they're required to carry workers' compensation insurance. The importance of this cannot be overstated. If a worker is injured working on your property and the contractor doesn't have insurance, you could be liable to pay for injuries and rehabilitation. Your homeowner's insurance may or may not cover those costs. You should check with your insurance carrier to make sure the workers' compensation insurance coverage being provided by the contractor is adequate.
Commercial general liability insurance is not required, however, it covers damage to your property. If the contractor does not carry general liability insurance, they should be able to explain how they would cover losses that would ordinarily be covered by insurance. If your contractor damages your property and doesn't carry commercial general liability insurance, you or your insurance policy could end up paying for damages.
A licensed contractor must provide you with information regarding both types of insurance in your written contract.
Learn about the contractor's bonds.
In most states licened contractors are required to have a contractor's license bond. It's important to know what bonds do and do not cover. Some bonds are designed to protect you against substandard work that does not meet with local building codes. Bonds do not assure the financial or professional integrity or competency of a contractor. Institutional lenders such as savings and loans, insurance companies or commercial banks generally require licensed contractors to secure bonds for large jobs.
Bonds may be classified as:
- Contractor's License Bonds
- This bond is written to cover any project the contractor agrees to perform. But, be aware, this bond is often not enough to cover multiple complaints made against it or your project if it's worth more than he value of the bond.
- Contract Bonds
- Contract bonds guarantees both the completion of the job and payment for all labor and materials. In general, the bonding company will not have to pay more than the face amount of the bond. The cost of this bond is usually 1-2% of the contract price.