15 Questions to Ask Before Hiring a Remodeling Contractor: Licensing and Insurance

Welcome back to our informative series, “15 Questions to Ask Before You Hire a Remodeling Contractor.” Today, we delve into question #3: “Are you licensed to work in my city or county?” This seemingly straightforward query holds significant weight in ensuring a successful remodeling project. Let’s explore why licensing and insurance are crucial factors to consider before hiring a contractor. 

Understanding State Licensing Requirements 

In the realm of construction, regulations vary from state to state. In some states, contractors and subcontractors must pass competency tests to obtain a state-issued license, demonstrating their ability to meet quality standards. Others may only need to complete an application and pay fees. However, irrespective of the process, all states typically mandate contractors to acquire appropriate insurance and bonding. 

Understanding State Licensing Requirements

The Importance of Insurance and Bonding 

To receive this license some states require the contractor or sub-contractor to take a competency test of their ability/experience to help prove that they are able to perform at the needed level for their customers. Other states only require that the constructor or sub-contractor fills out an application and pays the required fees. I believe that all states also require that the contractors or subcontractors purchase the needed insurance and bonding as well.  In the state of Washington where my business is located all contractors and subcontractors are required to have a minimum of $1,000,000.00 in liability insurance in case their efforts cause the homeowners’ home to burn down or other catastrophic damage.  In addition to this liability insurance, we are also required to get a $12,000.00 surety or performance bond.  The insurance requirement is pretty self-explanatory but the performance bond might need a little explanation.  This bond is for the homeowner should the contractor or sub-contractor not finish the project or not perform the work properly. The homeowner, instead of suing the contractor and going to court which can be a very, very costly endeavor, can instead go after the contractor’s performance bond.  Now in the state of Washington this performance bond is only for $12,000.00 which isn’t all that much when you are looking at a $75,000.00 kitchen remodel or a $200,000.00 addition. But if the issue you have with the contractor is something small and under the $12,000.00 cost of the bond then the performance bond is the way to go.  The homeowner simply calls the contractor’s bonding company and files a claim against the contractors’ bond.  Each bonding company requires different documentation to prove to them that the homeowner has a legitimate claim. Once the homeowners claim has been substantiated, then the contractors bonding company will pay the homeowner the amount of the claim, and then the bonding company will go after the contractor’s company to pay them back.  It’s as simple as that.  Some states have a higher bond requirement amount and some states a lower amount, so I suggest that you call your states labor and industries association to find out where your states requirements are. 

Understanding State Licensing Requirements

City Business Licenses 

In addition to the states contractor’s license, insurance requirements and the performance bonding needed most city’s that a contractor works in also require a city business license to work in that city.  Most contractors will work in a multitude of different city’s and they will need to get a local business license from each individual city. I suggest that you do your due diligence before you hire a contractor to see if their contractors license is active and if they have any claims against their company.  In the State of Washington you can go on the internet to the Washington state labor and industries website where you will find a plethora of information on each of the different contractors you are looking at hiring for your project.  There are many, many different contractor’s   out there who are working on people’s homes who are not licensed or insured or bonded, as this process is quite costly and they don’t want to pay the additional costs or jump through the different hoops to be legal. If you do hire an unlicensed contractor to do some work on your home and something happens to your home because of the contractors inexperience or neglect then most likely your homeowners insurance will not cover the needed costs to make things right again. I feel that if you spend a little time now looking at the different contractors you might want to hire you will save a huge amount of  effort, frustration and money later on when your project comes in on time and on budget.  

Choose Classic Remodeling NW Inc. for Expert Service and Peace of Mind. Contact Us Today! 

Classic Remodeling NW Inc. is proud to assure you that we are fully licensed to work in your city and county. Our commitment to compliance and professionalism is paramount, ensuring your peace of mind throughout every step of your remodeling journey. Don’t settle for uncertainty – trust Classic Remodeling NW Inc. for expert service backed by the proper credentials. Contact us today to bring your dream home to life, with confidence. Stay tuned for our next installment, where we explore question #4: “Are you a member of any trade organizations?” Join us as we continue our journey towards informed decision-making in remodeling endeavors.