Photo Credit: Annie Gray

Checking Credentials for Home Improvement Projects

Many people in the real estate business have heard horror stories about home-improvement projects gone awry, made worse when the company hired was not insured and the homeowner was left to foot the bill.

Here’s the type of scenario I’m talking about. Imagine Heather the Homeowner hires a contractor to complete a small home renovation. During the project, one of the workers falls off the roof and breaks his back. Heather feels terrible for the workman and his family but is glad she hired a licensed contractor because she assumes licensed contractors have workers’ compensation and liability insurance.

Sadly, she did not verify this assumption and the contractor had let his insurance lapse. Heather is terribly disappointed, but being a responsible homeowner, she has homeowner’s insurance and knows that it includes worker’s compensation coverage. What she did not realize is that the homeowner’s insurance does not provide coverage for work that requires a contractor’s license. Heather is now on the hook for a massive medical bill. No one wants to be in Heather’s shoes. Here are some steps you can take to avoid this kind of situation.

Before hiring anyone to do work on your home, get recommendations from trusted sources—friends and neighbors are a good place to start. If you’re the first on your block or in your friend circle to get this type of work done, you can always call your Realtor. Realtors tend to know reputable service people. Now that you’ve narrowed your list of potential hires, you can compare them on the basis of price, quality, and availability. A word to the wise: consider overall value rather than just price. Sometimes the cheapest vendor uses cheaper materials and cheaper labor—that’s not always the deal it appears to be.

Once you’re down to just a few vendors, invite them to bid on the job. If you’re hiring a teenager to mow your lawn, you don’t need to be quite so formal. But if you’re hiring someone to do any job that requires a contractor’s license (adding a second story, for example), it’s reasonable to interview the top bidders. When you find someone you click with, someone in your price range who you believe will provide the level of quality and the aesthetics you want, it’s time to complete due diligence, which includes asking for references, confirming the contractor’s license is in good standing, and asking for proof of insurance. (The contractor saying he has insurance is not the same as proof.)

This is where many people feel uncomfortable, but they shouldn’t. Any reputable contractor will be happy to provide references and the name of their insurer. In fact, it should be a big red flag if the contractor you’re thinking of hiring hesitates to comply with these requests. As for confirming the license, do not take someone’s word for it. Ask for their contractor’s license number and confirm it yourself:

Although you can confirm that someone has insurance, it can be difficult to verify all the details. If they are tree-trimming company and a limb they cut lands on your neighbor’s home, will their insurance cover the damage? How about if their chainsaw starts a fire?

The last thing you want is an uninsured claim for someone seriously injured while working on your property. So, while it may feel a little uncomfortable to verify license and insurance, it will help protect you. And by requiring liability and worker’s compensation insurance, you’re protecting the workers, as well.

If you have questions about getting into real estate, please contact me at or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery. Dick Selzer is a real estate broker who has been in the business for more than 40 years.

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