Almost every home improvement company describes itself as licensed and insured. The phrase appears on trucks, yard signs, and the first page of most proposals. It is also unverified by default, because nobody is checking it on your behalf.
Confirming it yourself is not difficult. For most homeowners it is twenty minutes of work spread across a few websites and one phone call, and it is one of the least expensive pieces of due diligence available on a project that may run into five figures.
Licensing Varies More Than People Expect
There is no national contractor license. Requirements are set at the state level and sometimes at the county or city level on top of that, and they differ enormously.
Some states license general contractors and each trade separately, with exams, bonding requirements, and minimum experience. Some license only specific trades such as electrical, plumbing, and HVAC, and leave general remodeling unregulated. Some set a dollar threshold below which no license is needed. A company can be entirely legitimate in one state and operating without a required license a few miles across a border.
The practical step is to find your state's contractor licensing board, which is usually reachable by searching for your state name plus contractor license lookup, and search by the company name and by the individual's name. Confirm four things:
- The license is current, not expired or lapsed
- The classification matches the work, since a license to do general remodeling may not cover electrical or roofing in your state
- The name on the license matches the name on the proposal, which catches the case where a salesperson works under someone else's license
- The disciplinary history is clean, or if it is not, that you understand what happened
If your state does not license the trade you are hiring, check for a local business registration and move more weight onto insurance and references.
Insurance Is Two Separate Things
General liability insurance covers damage the contractor causes to your property. Workers compensation covers injury to their crew. These are different policies and a company may carry one without the other.
Why it matters to you: in many states, an uninsured worker injured on your property can become your problem, and your homeowners policy may or may not respond. A contractor who subcontracts the work should be able to tell you whether the subs carry their own coverage.
Ask for a certificate of insurance, and then do the part most people skip. Call the insurance agent listed on the certificate and confirm the policy is active. Certificates are easy to alter and easy to let expire. An agent will confirm active coverage in a two minute call, and many contractors will offer to have the certificate sent to you directly by the insurer, which is a good sign.
Check the coverage dates against your project window. A policy expiring midway through a roof replacement is worth raising before work starts rather than after.
References Are Only Useful If You Ask Better Questions
Any company can produce three happy customers. The value is in what you ask them.
Ask for recent references, meaning projects finished in the last several months rather than years ago. Crews change, ownership changes, and a company's performance three years ago tells you less than its performance last spring. Ask specifically for a project similar to yours in size and type.
Then ask questions that invite a real answer:
- Did the final price match the proposal, and if not, what changed and how was it handled?
- Did the crew show up when they said they would, and who did you contact when they did not?
- What went wrong, and how did the company respond? Something always goes wrong.
- Was the site cleaned up daily, or at the end?
- Has anything needed warranty attention since, and how did that go?
- Would you use them again for a larger project?
The last question tends to be the most revealing, because it separates satisfied from merely finished.
Asking to see a job in progress is also reasonable. Ten minutes at an active site tells you about protection of the property, organization, and how the crew works.
Public Records Worth a Look
Check your state attorney general or consumer protection office for complaints, and your local Better Business Bureau listing. Search the company name alongside words like lawsuit, complaint, or lien. Also check whether the business name is recently registered, since a company operating under a new name after problems under an old one is a known pattern.
Read reviews for detail rather than for the star rating. A specific negative review that the company answered thoughtfully is more informative than a page of short positive ones.
Warning Signs
- Reluctance to provide a license number or insurance certificate
- A request for a large payment up front, particularly in cash
- Pressure to sign the same day, or a price that expires when the salesperson leaves
- An offer to skip the permit, or to work without one to save you money
- No physical business address, or an address that turns out to be a mailbox
- Unwillingness to put the scope of work in writing
Any one of these can have an innocent explanation. Two or more together is a reason to keep looking.
Do This Before the Deposit, Not After
Verification is most useful before money changes hands, because that is when you still have leverage and options. Once a deposit is paid and materials are ordered, walking away gets expensive.
Line the checks up alongside the written scope, which we cover in what a written scope of work should cover, and make sure you know whether the number you have been given is a quote or an estimate, explained in how to tell a quote apart from an estimate. Warranty terms are a separate document again, covered in understanding workmanship and material warranties.
When you are ready to gather numbers to compare, tell us about your project and we will connect you with contractors serving your area. The service is free and there is no obligation to hire.