“Licensed, Bonded, Insured” – Understanding Those Contractor Claims to Fame

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You’ve seen it in Yellow Page ads and on the side of work vans. As an individual, what does a “licensed, bonded, and insured” contractor mean to you?

Licensed

Doing business with a licensed contractor is prudent for several reasons. First, the license proves that the contractor must have exhibited a degree of competence through testing, training and/or experience.

Bonded

Contractors typically obtain specific bonds for specific jobs. It is rare that an individual homeowner, for example, would require a contractor to obtain some type of bond as a prerequisite to performing a job. Bonding is typically required by builders, government and commercial entities. This is why a contractor who tells you that the firm is “bonded” likely means it is “bondable” (unless you are obtaining bids on behalf of one of the entities mentioned above.)

Insured

General Liability

Builders, government and commercial entities typically require that a contractor show proof of general liability insurance before it is hired to do a job. Unfortunately, many individuals do not show the same diligence.

Using a contractor that lacks liability insurance could be an expensive mistake.

Workers Compensation

Builders, government and commercial entities typically require that a contractor show proof of workers compensation or filed exemption before it is hired to do a job. Unfortunately, many individuals do not show the same diligence.

Conclusion

Hiring a contractor to perform a job for you is expensive enough! Why take a chance at drastically increasing the cost by using contractors that aren’t adequately insured?