Is My Contractor Properly Licensed, Bonded and Insured?
Posted: Monday, June 22, 2009
by Wes Hamilton
Plumb Pro, Inc
Tips on how to safely pick a good contractor for your home improvement project or repair work. Almost every form of advertising from a contractor, whether it be simply their vehicle signage or in phone book advertising, you will repeatedly see the phrase "Licensed, Bonded and Insured". Do you as a consumer actually know what each of these words mean and how they can affect you? You BETTER!
FIRST- Being Licensed can mean many, many, things. So, if your plumber says that he is licensed what exactly does he mean? Does he mean that he has a DRIVERS LICENSE - HA :-)!! Does he mean that he has a STATE ISSUED PLUMBING LICENSE, or a local business license, or BOTH? Well, if he is legitimate he will certainly have a STATE ISSUED MASTER PLUMBER and/or MASTER GAS FITTER license. He will also have a local business license and perhaps multiple business licenses for each municipality that his company services. He should be able to produce these items for you upon request - if he actually has them. You can also call or go online your State Plumbing and Gas fitters Board to check the status of your plumber without them ever knowing! Also, call your municipality (City / County) to check their business license status.
SECOND - Bonded - what does that mean? Well there are many types and forms of Bonds and Bonding. For, instance in my service area, which covers approximately 15 different municipalities, I am only required by two of those municipalities to actually have a bond on file with the jurisdiction (city / county). Here is the real KICKER - the bond required for the year is only for $ $10,000.00! If a customer had a problem and had to challenge my company or the city on a job that was messed up they could could only claim up to $10,000.00 of damages (the amount of the bond on file). That naturally will not cover much in damages. Remember that I am not required by the rest of my service area to be bonded. If there were to be a problem then the customer (you) would have to HOPE that I am a decent human-being an honest businessman and will honor my warranty. If I do not choose to honor my warranty - then what will you do? Well, you will have to hire an attorney and sue me for damages! This is a long drawn out process and sometimes is not worth the trouble. Lets assume, though, that you do sue and win -- If your contractor is an INCORPORATION or an LLC then he could simply close the company. The reason that I am telling you this is that YOU SHOULD USE A GOOD, ESTABLISHED COMPANY and be willing to pay just a bit more for their services! You will save in the long run. THIRD - Insured - the proper type of insurance and the policy amount is very important . Sometimes the only thing that is insured is the vehicle and it is not even on a COMMERCIAL POLICY. A lot of good that will do if there is a problem with the work, your house floods out or burns to the ground! The proper insurance you should be looking for is called GENERAL LIABILITY INSURANCE- preferably with a WORKERS COMPENSATION policy. General Liability Ins. should be a policy with a MINIMUM of at least $1million dollars with an umbrella (excess coverage per incident) of at least the policy minimum( $1MILL in this case) or in most cases double the base policy coverage. Having this insurance is EXPENSIVE and many contractors do not have it. They manage to skate by never being caught or even asked about it. You as the consumer should only deal with contractors with the above mentioned qualifications. A contractor who meets these qualifications will probably take good care you - it is in their best interest to keep you happy. Thank you for taking time to read this article, hopefully it will be of help to someone! Wes Hamilton PLUMB PRO, INC http://www.plumbpro.net/ http://www.plumbproinc.com/
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Top-level comments on this article: (7 total)Good information Thanks for writing
I never had given all of this much thought. You give solid reasons to make sure anyone I bring into my home has proper credentials. Thanks.
You as a consumer have to be extra careful especially now with the economy the way it is. A lot of construction workers have been fired from their jobs and cannot find another job. So, consequently they can buy a used van for $3000.00 and "open their own business". I really cannot blame them because they do have to feed their families, but it is not fair to those of us with real/actual business. They DO NOT buy insurance or business licenses -- You can spot these guys real easy - their work trucks do not have lettering on them the vast majority of the time. By law service businesses and others ARE REQUIRED to have easily readable lettering on them. We business owners don't letter our vans just for PRIDE! Also alot of the construction workers were let go because they were not a GREAT ASSET to the company - WE ALL KEPT OUR TOP EMPLOYEES! So, you as a consumer end up with a sub par technician in your home who MAY (or MAY NOT) mess something up. Do you think this guy who cant afford insurance and a business license will return and fix his mistake at his cost? The answer is NO. These same people usually ask for a DEPOSIT of some kind up front - they cant even finance the jobs they are doing!!!! Your contractor shouldn't need a deposit or draw to get started. 9 times out of 10 the guys get the deposit buy CRACK and leave you hanging! BE CAREFUL!!!!!!!!!!!!!
Yes this article was helpful. I have never checked the credentials. I just assumed they met the standards or the phone books would'nt let them advertise
Good Information.
5 STARS
A+ Good info!
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