Risk #1: Unlicensed contractors don’t have “proof” of specialty in which they are claiming expertise. Think you are getting a “better deal” by getting an “unlicensed” contractor? Think again…you could end up having to hire a licensed contractor to correct their work and paying for the job twice. That is no deal.
In California, anyone who contracts to perform work that is valued at $500 or more for materials and labor must hold a current, valid license from the Contractors License Board in the specialty for which he or she is contracting.
Risk #2: Unlicensed contractors usually do not have bonding and workers compensation. How does this effect you? If an unlicensed contractor or one of his worker is injured working on your property and doesn’t have insurance, then you may be responsible for injuries and rehabilitation through your homeowner’s insurance policy. Are you still getting a “better deal” then if you would have hired a responsible licensed contractor from the beginning? In California, if a contractor has employees, worker’s compensation insurance coverage is required by law and you can verify it by visiting the CSLB’s web site.
Risk #3: Unlicensed contractors usually do not carry liability insurance. If a contractor damages your property and doesn’t carry general liability insurance, you or your insurance policy could end up paying for damages.
Home improvement contractors must tell you whether or not carry general liability insurance and that it will protect against third-party bodily injury and property damage. If uninsured, they should be able to explain how they would cover losses that would ordinarily be covered by insurance.
If a contractor is insured against claims covering worker’s compensation, property damage, and personal liability in case of accidents, ask to see a copy of the certificates of insurance, or ask for the name of the contractor’s insurance carrier and agency to verify that the contractor has the insurance.
A responsible and informed consumer can work more effectively with reputable contractors, and can avoid being victimized by unscrupulous or unlicensed operators.