Licensed & Insured - What Does it Mean?

Many homeowners feel more comfortable hiring a contractor who runs his business professionally, ethically, and per required state and local regulations over a contractor who doesn't.  You expect these traits from a professional contractor. Contractors know this, so sharing information that communicates they are professionals on their vehicles, job signs or collateral materials with prospective clients is in their best interest.  

So what do you think when you see "Licensed and Insured"?  Many of us have seen a contractor's truck or van going down the highway with these words noted somewhere on the vehicle.   What kind of license and what type of insurance does the contractor hold?  

If you are preparing to hire a remodeling contractor you want to clarify "Licensed and Insured".  In Georgia, homeowners should familiarize themselves with Georgia's Residential General Contractors licensing law so you are clear on which contractors are required to have a license to perform their work. The majority of projects that require a building permit must be performed by a licensed residential contractor. So when a contractor promotes that they are licensed, ask to see a copy of their Georgia Residential/General Contractor's license.  You can verify if a remodeling contractor or builder is licensed by visiting the Georgia Secretary of State's website.  Your local building department is also a great resource to determine if your contractor is required to hold a license for your particular renovation. Remember, don't confuse a business license for a state contractor's license and be diligent and verify.

Some signs/responses that your contractor may not be licensed:

• We don't need to pull a permit for your project 
• We don't pull permit's because they add cost and waiting for inspections only delay your project
• If you want us to permit your project we recommend that you secure a homeowner's permit 
• Since we mostly only do roofing and painting we are not required to pull a permit to build your deck
• We know and follow all the codes so we don't need a permit

When it comes to insurance you need to be extra diligent to protect your home, family, and property.  An uninsured contractor can put you and your families financial well being at risk.  Many contractors advertising they are insured most likely only possess a general liability insurance policy.  When it comes to workmans compensation insurance, many contractors do not have coverage as the state of Georgia only requires a company to have coverage if they have three (3) or more employees on payroll.   Though Georgia law notes this, you must ensure that you take steps to protect your family and your home.  To better understand what coverage your contractor holds request a copy of the insurance certificate from the carrier.  Do not rely on a copy from the contractors as they may not be current with their premiums and could have been cancelled.  Also, contact your homeowner's insurance carrier and determine what risks may exist if your contractor is not properly insured.  Share proposed project details and describe a few what if scenarios to get clarity on how an incident or injured worker could affect your policy should your contractor not be fully insured.

When you are ready to remodel and want to ensure you are working with a state licensed contractor with the required insurance, consider hiring a NARI contractor.  NARI members agree to adhere to a Code of Ethics and standards of practice.  Many NARI contractors have obtained Certifications in addition to the licenses and insurance they are required to hold. So next time you see "Licensed and Insured" verify that your contractor possesses the required licenses and policies.