Discover what homeowners risk when hiring unlicensed or uninsured contractors.

When hiring a contractor to do work around your home, do you verify they’re licensed and insured? If not you’re taking several risks.

Risk of poor quality work

To get a professional license, contractors like electricians, plumbers and others have to prove they know safety regulations and how to perform work according to code. They also know when permits and inspections are required and will handle these aspects of the job.

Financial risk

Millions of home improvement projects are completed each year without complication. However, sometimes things go wrong. A worker causes property damage or worse, gets hurt on your property. If your contractor isn’t insured, you as the homeowner are on the hook financially.

Homeowners should not be tempted to hire unlicensed contractors who offer to do a job cheaply and without getting permits. Unpermitted work can turn out much costlier later if any of the following happens:

• The contractor cuts corners and you have to spend more to correct problems
• You’re fined for code violations by the local zoning authority and may be required to have the work redone
• The work leads to problems—like water damage or an electrical fire—and an insurer denies the claim because unpermitted work voided coverage
• Property value is lowered and when you sell the home you walk away with less money

How to find out if a contractor is licensed

The State of Michigan’s Licensing and Regulatory Affairs (LARA) agency provides a database for all licensed professionals and businesses, including skilled trades. Access it here.

How to find out if a contractor is insured

To find out if a contractor is insured, do two things. First, ask them for proof of insurance. Someone who’s insured can easily provide this document. Second, contact the insurer to verify that the policy is in place and paid up through the time it will take to complete your project.

Do not hire a contractor who can’t provide proof of insurance or makes excuses about why they can’t. The risks are too great.

Planning a big project?

Home improvements and remodeling come with big rewards but also require significant sums. One solution is to finance projects with a home equity line of credit (HELOC).

 

 All loans subject to approval. Rates, terms, and conditions are subject to change may vary based on credit worthiness, qualifications, and collateral conditions. Federally insured by NCUA