Homeowners Should Always Hire Licensed Contractors to Avoid Homeowners Insurance Claims and Major Headaches
By: Mary Thompson, Capstone Brokerage President, June 17, 2014
With spring in the air many homeowners are thinking about projects that they would like done around the home. Some are creating extravagant “honey do lists” while other are thinking about hiring companies to complete more labor intensive projects. There are several reasons a homeowner may need to find a licensed contractor to complete work in their homes. A licensed contractor although more expensive then the average “Mr. Fix It” can really save a homeowner in the long run.
In my past I too have been guilty of hiring a neighbor’s friend or someone recommended by a friend that does “great work”. The price was right and the recommendations endless, but he wasn’t a contractor and wasn’t insured. One year later I sure learned my lesson. The guy that I paid to change out the cabinets, toilet and sink in my home didn’t use the right materials to seal a new toilet and sink fixtures… The smell of dirt (I learned later was actually the smell of mold), a wet bathroom wall and baseboards coming undone were my first sure sign that I needed to get a professional in to fix what Mr. Fix It had messed up. I was left with mold in my walls, pipes that needed to be replaced and dry wall that was anything but dry. Needless to say thousands of dollars later, I learned my lesson.
Here are some great tips and tricks I have learned over the years about hiring a contractor for projects around my home:
- Don’t automatically select the lowest bidder, they are low for a reason, their work may be lacking quality or they may be bidding low to get their foot in the door to raise the price later.
- Avoid a contractor who requires all payment up front. Standard practice should be 33% for start-up and the remainder upon completion. (if the project is larger perhaps payments as tasks are completed off a punch list)
- It is good practice to get recommendations and references but it is still very smart to do some research on your own. With the internet this should be as simple as a google search and a quick check with the better business bureau at(link www.bbb.org)
- Ask for a written estimate from the contractor. This should include any oral agreements the contractor makes. The estimate should contain a line-by-line breakdown of costs, including materials and labor. Also be sure to keep a copy of anything you sign especially the actual contract.
- If you ignore all other suggestions this may be the MOST IMPORTANT. Verify that the (link to old blog Licensed Bonded and Insured) contractor is licensed, bonded, and properly insured. Ask for certificates of insurance for workers compensation and general liability policies. This can protect a homeowner from faulty work, incomplete projects, injuries in the home and even worse.
If you follow these simple steps, hopefully you will avoid a large homeowner’s insurance claim like I had. As an insurance broker I always like to tell my clients that something like a leak in your wall can cost a homeowner more then just their deductible. The headache and inconvenience is always the worst part. It is always best to ensure that anyone working on your home is licensed and insured. The best practice is to make sure that you hire a contractor that knows the ins and outs of whatever you’re having done. Even a landscaper installing backyard landscaping needs to be properly educated and of course insured… Sprinklers can cause leaks too.
With these tips hopefully you can help to avoid the dreaded call to your broker that your home is under a foot of water. Sit back and enjoy the beautiful weather and spring projects while your licensed contractor sets your mind at ease with their proven expertise. One more thing , know your limits of do-it your self projects, I still have a ½ complete uneven backsplash in my guest bathroom, shh no one will notice.
