Contractors should carry two types of insurance: liability and worker’s compensation. As a homeowner, these protect you in two ways. First, liability insurance will protect you in the event the contractor causes damage to your home.
Bonding is often confused for insurance, but there is a notable difference. A bond is intended to act as a guarantee that the contractor will perform the work as he or she is supposed to. It is secured money that would be distributed to the homeowner in the event the contractor failed to perform as he or she should. Don’t take a contractor’s word that he or she is bonded. Ask for proof of the bond and be sure you understand exactly what it covers.
Licensing offers proof that the contractor has met certain industry training standards and is allowed to do the work in your area. Hiring an unlicensed contractor could cost you big. If the work does not meet local building codes, or the contractor doesn’t pull the necessary permits (which an unlicensed contractor cannot do), you will be responsible for making the repairs to meet code. Allowing work to be done by an unlicensed contractor could also void your homeowner’s insurance policy, should a claim arise as a result of that work.
Licensed, bonded and insured contractors usually charge more than those who haven’t earned the credentials or paid for the insurance protection. nsured or bonded, what else is he or she cutting corners on? If something goes wrong, it’s you who will be paying the price.