Looking for someone to do a home-improvement project? An ad on Craigslist or a flier left at your door might promise low-cost labor with a quick turnaround. But it’s no deal if the contractor isn’t licensed, bonded and insured. When a contractor is licensed, you have some assurance that you’re not hiring an outfit that thrives on quick, shoddy work and then disappears. An unlicensed contractor also isn’t likely to get the permits and line up the inspections necessary to make sure the job meets local building codes (failing to do so could cause headaches when you want to sell your home). Most states and municipalities require a license for anyone performing a home-improvement project that requires labor and materials above a certain cost threshold.
To get a license, contractors must meet requirements for training and experience, pass a criminal background check and post a surety bond, which shows that they intend to comply with building codes and make good on their work. They must also provide proof of general liability and property-damage insurance, which covers injuries to employees and damage to your property or your neighbor’s, as well as coverage for worker’s compensation. In most states, licensed contractors must contribute to a “contractors’ recovery fund,” which is used to compensate homeowners who have obtained a judgment in a civil suit against a contractor.
