When hiring a contractor, most people consider two primary factors: the cost of the job and the anticipated quality of work.
Clearly, you want to get the best quality for the lowest price possible, but this is not all that you should consider when choosing a contractor. Rather, it is also essential to take the steps necessary to ensure you are protected in case something goes wrong with the project.
While most homeowners realize they need to get a contract that provides specific details about the project, many fail to ask about three little known documents that they should insist upon receiving: a copy of the contractor’s license and a copy of their workmen’s comp and liability insurance policies.
The Contractor’s License
While licensing requirements vary from one state to the next, most have some sort of procedure for contractors to follow in order to become licensed. Remember, it is not good enough to simply ask the contractor if he is licensed. Rather, you need to obtain a copy of the license so you can check the expiration dates and so you can call the issuing authority to verify that it is still in good standing. If the contractor is not licensed, you should never trust your home or your money to his company.
General Liability Insurance
While general liability insurance protects the contractor against lawsuits related to bodily injury or property damage, it also protects your home from damage and negligence of the contractor. The policy will also protect you if any of the contractor’s employees and sub-contractors cause damage to your property while working on your project.
If the contractor does not have insurance in place and something goes wrong, you will either have to pay for the damage yourself or sue the contractor for damages. Obviously, suing someone costs money, and you may never receive the compensation even if it is awarded to you.
A third option is to file a claim with your homeowner’s insurance, but there is no guarantee the cost will be covered, particularly if you cannot prove that you hired a licensed contractor to do the work.
In addition to protecting your home from damage, you also need to protect your pocketbook if someone gets injured while working on your project. This is where workmen’s compensation becomes important.
If the contractor does not have workmen’s compensation coverage, you will be held responsible for any injuries the workers sustain while working on your project. If the contractor you hire is just a one-man operation, he may be exempt from carrying workmen’s compensation.
In this case, you should ask the contractor to provide you with a copy of his certificate of exemption. Going this route can still be risky, however, as you still may find yourself in trouble if the contractor decides to bring someone along to help or if he hires a subcontractor.