Risks of Hiring Unlicensed Contractors

Understanding the Risks

Considering a remodel or home improvement project?   There are financial and safety risks involved with hiring an unlicensed contractor(s).  A sting operation conducted by the Contractor’s State License Board: (CSLB) in Folsom, CA,  led to 23 suspects facing misdemeanor charges of contracting without a state license.   http://www.sacbee.com/news/local/crime/article110685257.htm

Types of Coverage

Contractors should carry two types of insurance, Liability and Worker’s Compensation, which protect the homeowner in two ways.  Liability insurance protects you in the event the contractor causes damage to your home, while Worker’s Compensation protects the homeowner for injuries incurred on the job.

More likely than not, your standard homeowner’s policy will not cover damages caused by an unlicensed contractor, or injuries to the contractor/employees. If your homeowner’s insurance policy helps cover the cost to pay the claim (after you pay your deductible), this may lead to an increase in rates and make it difficult to obtain insurance coverage in the future.

Another level of protection is bonding, which is often confused for insurance, but there is a notable difference. A bond acts as a guarantee that the contractor will perform the work he/she was hired to do. Bonding is secured money that would be distributed to the homeowner in the event the contractor failed to perform.  In order to have a valid/active license, a contractor must be bonded.

Price isn’t the only factor to consider when hiring a contractor.  Do your homework.  Ask for references, obtain copies of insurance documents and verify licenses, Check a Contractor License.

Remington Moulin Construction has been providing quality work and design advise for homeowners for over 24 years.  We would love to discuss and bid your residential project.

Remington Moulin, Owner
530-409-4458
License #: 663289