So you’ve found the perfect contractor for your renovation project! Maybe their prices are exactly what you were expecting, and their timeline works right with your schedule. Whatever the case may be, we know it’s exciting, but don’t get over-hasty when it comes to starting a remodeling project. Before you sign the dotted line, make sure that your contractor is licensed and insured.
Why Check For License and Insurance?
Before you sign a contract for your renovation, be sure to verify your contractor’s license and insurance.
While it may seem like any contractor worth their salt is bound to have their license and insurance together, you may be surprised by the reality. In the past, some contractors have forgone getting a license or getting it renewed due to the costs associated. They provide cheap work for clients under the table, and in turn they don’t have the overhead of having to pay to sustain a contractor’s license.
In reality, licensing is not a matter of being financially savvy. In the state of California, it is illegal for contractors to operate without a valid license.
Additionally, a license indicates that your contractor is meeting industry standards for expertise in their field. To get a license, contractors have to pass a contractor’s exam, and have substantial work experience or education under their belt.
So, although unlicensed contractors can be tempting to work with due to their low rates, working with them is going to cost you more in the long run due to poor craftsmanship, damages to the property, or possibly even injuries sustained by workers.
That’s right – if your contractor is uninsured, you are liable as the homeowner to pay out of pocket for worker’s compensation costs instead. That’s why it’s crucial to check out a contractor’s insurance and license before you begin working with them.
What’s more, a licensed contractor will be on the project with you until the very last punch-list items are satisfied. An unlicensed contractor, on the other hand, has no such obligation. In the worst case, an unlicensed contractor could take your money and disappear, like this San Jose Nextdoor user:
As this user writes, you can always go to small claims court to dispute the missing work and get your money back. However, court proceedings take a lot of time, energy, and money to carry out. It’s far easier to verify your contractor is licensed and insured in the beginning, and not have to worry about running into these “what-if’s” later.
Where to Verify If Your Contractor is Licensed and Insured
The best place to verify a contractor is licensed and insured in California is the cslb.gov website.
Luckily, in the state of California, finding a contractor’s license and insurance information is fairly straightforward. The Contractors State License Board, or CSLB, keeps public records on their website: cslb.ca.gov
To check a business’s license, click on “License Check” at the top, or head to this link: https://www.cslb.ca.gov/onlineservices/checklicenseII/CheckLicense.aspx
From there, you can type in the contractor’s name, business name, or license number to find their information. To help filter the results, it may also be helpful to have the City that they’re based in on hand.
Click on the blue license number to view the contractor’s information. Note: a license number on this page does not guarantee the license is still valid.
Once you find the name of the business or contractor that you’re looking for, click on their license number in blue to find out more information.
From there, you’ll be sent to their License Detail page. Under business information, you can tell if they hold a valid license by reading the information under “License Status.”
To check that they’re properly insured, scroll down to the section titled “Workers’ Compensation.”
There, if they have valid insurance, you’ll be able to see their insurance company information, policy number, effective date, and expiration date.
Other Considerations
If you’ve worked with an unlicensed contractor, you can report them directly on the CSLB website. You can also report them to the Better Business Bureau.
Name Verification. When you check the license for an individual contractor, be sure to pay attention to the name of the licensee. There have unfortunately been mishaps in the past where one unlicensed contractor will borrow another’s license to appear above-board. By checking that the name listed on their license matches their name, you’ll be able to avoid dealing with fraud.
Payment Schedules. One red flag that may indicate a contractor is unlicensed is if they ask you to pay for everything up-front. In the renovation industry, it’s standard practice for the client to pay a small downpayment upfront, but nothing else.
The law in California is that upon signing, the client will pay either a 10% downpayment on the project or $1000, whichever is less. From there, you’ll be asked to pay periodically for the work completed as agreed upon in the contract.
Reporting Unlicensed Contractors. If it’s too late, and you’ve already worked with an unlicensed contractor, you’re not completely out of luck. You can go to small claims court to get your money back.
After all, it is the law in California that contractors need to be licensed, so you’ll have the upper hand in that case. You should also report them to the CSLB, and the Better Business Bureau, so that they’ll be flagged in the future.
