License, Bonding, and Insured is an often overlooked consideration when choosing a contractor. However, it is an essential and crucial aspect of any home improvement project when hiring a contractor.
Understanding the Basics: Licensed, Bonded, and Insured
So, why does it matter if a contractor is licensed, bonded, and insured? Let's break it down:
- Licensed: A licensed contractor has proven their competence through years of work experience and by passing trade and law exams. This ensures they have the knowledge to perform the job correctly and safely.
- Bonded: A bond is essentially an insurance policy for the consumer. It protects you if the contractor fails to complete the job or meet contractual obligations. If they walk off the job, you can file a claim against their bond to recover your money.
- Insured: Contractors should carry general liability and workers' compensation insurance. This protects you from liability if a worker is injured on your property. Without it, you could be held responsible for medical bills and other expenses.
The Real-Life Impact
Here is a sobering reality, if a contractor or their employee gets hurt on your property and they don't have proper insurance, you could be liable. Imagine someone falling off a ladder at your house and suddenly facing a lawsuit that could cost you your home. It’s not just about avoiding a headache; it’s about protecting your livelihood.
The Cost of Compliance
The reality is, maintaining licenses, bonds, and insurance is not cheap for contractors. For example, a mid-sized contracting business in California might pay over $100,000 a year for general liability insurance and even more for workers' compensation. While these costs might make some contractors skip these essentials, the ones who invest in them demonstrate their commitment to professionalism and consumer protection.
Why Some Contractors Skip Being Licensed, Bonded, and Insured
The reality is that not all contractors adhere to these standards. Why? Because the cost and effort required to maintain licenses, bonds, and insurance are significant. Some contractors mean well but are notoriously disorganized. They might forget to pay their insurance or license renewal fees, resulting in suspended licenses without their knowledge. Others may deliberately avoid these costs to save money, hoping to fly under the radar.
Exposeco’s co-founder Paul Tarpy explains, “That protection, having that eye for the consumer, is what I think is a huge gap in home services right now. Everybody's out there to make a buck and they only have their own interests at heart. Exposeco’s here to close that gap and have the consumer's interest at heart. We do this every day, checking to make sure contractors are valid and not just smoke and mirrors.”
Even with good intentions, some contractors find themselves in situations where their licenses are suspended due to non-payment or administrative errors. Despite the suspension, they often continue to work because they can't afford to stop. They have bills to pay and employees depending on them, making it a challenging situation for everyone involved.
Conclusion
It's clear that hiring licensed, bonded, and insured contractors is essential for protecting yourself and ensuring the job is done right. Don’t cut corners; your home and peace of mind are worth the investment.
Have you experienced having a contractor not completing the work you hired them for? Did you file for their bond? Share your experiences and tips in the comments below. Let’s help each other stay cool and informed!