Reasons For Hiring A Licensed and Bonded Home Remodeling Contractor

Your home is probably the largest investment you'll make in your lifetime. When it comes time to have work done, choosing the right home remodeling contractor is an important step to a successful remodel.

The process should begin by researching local contractors. Check out websites, speak with friends who have work done and check online reviews.

Once you've narrowed the field two three or four, interview them and check out their work, get references and talk to them. Whenever possible visit recent project sites and visually inspect their work. When you're ready to make a decision, ask the final and most important question, “are you licensed, bonded and insured?” Anyone who can not verify that they are should be dropped from your short list. That's how important this question is.

Why Hiring A Licensed and Bonded Home Remodeling Contractor is Crucial

The laws for receiving a contractor's license differs by state. In most cases, a license is required to do any type of skilled labor in another person's home or property. Tradesmen like a drywaller, electricians and plumbers need to be licensed, and design-build remodeling firms and general contractors require a contractors license.

WISCONSIN TIP:  In Wisconsin, it's not called contractor licensing. Instead, Wisconsin law requires contractors to hold two credentials or certifications. Likewise, Wisconsin also requires contractors to carry liability insurance but not bonding.

States may impose specific requirements like apprenticeships, educations levels or work experience to get a license and often testing is involved. Licensing can require different levels of testing to move up in terms of skill level. The state may also require a contractor to carry workman's compensation insurance in order to obtain a license. Many states also require bonding to obtain a license.

A bonded contractor carries a surety bond which is a type of insurance to protect the homeowner. The bond provides a fixed amount of liability insurance and if the contractor fails to complete a job as promised and contracted for, the bond is used to compensate the homeowner. To determine the amount of protection available when you hire a bonded contractor, you can speak with an attorney. If your project is particularly large scale, for example adding a large addition, it's a smart practice to make sure that the contractor has purchased a large enough bond to cover potential problems.

WISCONSIN TIP: Bonding is not required and is rarely used for residential remodeling in Wisconsin. However, Workers compensation insurance is designed to place a firewall between the contractor and their client. It also protects the employee doing the work. But for small companies, Workers Compensation (Work Comp) is not required by law. Be aware that without a Work Comp policy, you the homeowner are not protected. For example, a health insurance company, even against the wishes of the worker, can sue you if they are injured while working at your home. Only Workers Compensation insurance will protect you from this risk because work comp is a firewall between you and the worker.

We illustrate the risk of hiring a company without workers compensation insurance in this brief video cartoon.

The Importance of Verifying Licensing and Bonding

There are many advantages and important reasons for hiring a contractor or design-build remodeling firm that is properly licensed, bonded and insured. First and foremost, hiring an unlicensed contractor is risky. He may not only not be licensed, there's a good chance, he's not properly permitting his jobs, and avoiding inspections.

This can result in major code problems down the road when it comes time to sell. Many localities will actually require a homeowner to return their property to a “pre-remodeled” state before you can sell. This is at your expense and can cost you big depending on the scope of unlicensed work performed.

Aside from the possibility of sub-par workmanship, when working with an unlicensed contractor you have given up any warranty claims. Most states imposed implied warranties on licensed contractors for bad workmanship, these warranties only cover home remodeling contractors who a properly and currently licensed. If you work with an unlicensed contractor, your state contractor board will not help. You will be required to file a civil suit and even if you win a judgment, they will most likely not be insured, or personally able to cover your damages.

Finally, if an unlicensed uninsured contractor or any of his employees is injured on the job you may be liable for damages. A licensed contractor is required as a part of licensing to carry workman's compensation insurance. An unlicensed contractor may not have this coverage or any other protection. Which means that if a contractor or member of his crew is injured on your property, you could be held legally liable and be forced to pay for damages.

WISCONSIN TIP: In Wisconsin, you can look up the status of the Dwelling Contractor Qualifier credential and the Dwelling Contractor credential at this web site. Scroll down to "Trades Credential/License Search" and then complete two searches, first for Dwelling Contractor and second for Dwelling Contractor Qualifier. Your remodeler should carry both of these. Be sure they are not expired.

So, the bottom line... when you get close to signing a home remodeling contract, ask to see, and get copies of, all licenses, bonding, and insurance and make sure to verify that your choice is fully covered and current. To avoid potential issues for hiring an unlicensed contractor make sure to contact your state licensing board to verify that your contractor is licensed and in good standing.

This article was updated by Abe Degnan on 8/3/2018.

About Degnan Design-Build-Remodel
Since 1981 Degnan Design Build Remodel has provided home improvement and construction services to customers throughout Greater Madison, Wisconsin. Our goal is to WOW you with a "Designed For Your Life" solution using a process that will transform your home into a beautiful living space, delivered on time, and on budget. We are known for our communication, respectfulness, and a commitment to our customers and our community. Contact us to speak with one of our designers about your home improvement project.