When a contractor says they re insured, it means they are covered for liability purposes.

In other words, if they damage your home by fire, breaking a water pipe, or even hitting underground lines – they are insured for the damage they caused. If you or someone else is injured due to negligence by the contractor, the contractor s liability coverage will cover the cost. There are usually state-mandated minimums of insurance required. Depending on the state, insurance limits can be minimal and might not cover the cost of the damage.

However, just because a contractor has Insurance does not mean he is a good fit for your project. You still need to shop around.

Liability insurance does not cover a bad job. Often, the only recourse the owner has is to take the contractor to court. Going to court can be costly and does not always get you the results you are looking for. It is always best to choose a contractor with years of experience successfully satisfying their clients. Ask to see their work, speak to their clients, and look to other professionals in the area for information about their reputation. Check with the Better Business Bureau and the Chamber of Commerce.

You should feel absolutely comfortable in the competence of the contractor you choose. Finding one with years of experience successfully satisfying clients is always a good start.

“Are you a licensed contractor?”

Consumers searching for contractors often hear, “Make sure your contractor is licensed, bonded, and insured.” However, getting licensed often has bonding or insurance requirements, meaning consumers generally only need to make sure their contractor has an up-to-date license.

What does it mean to be a licensed contractor?

In order to obtain a contractor’s license in Maryland, an individual must:

1. Meet the experience requirement for each classification
2. Have an owner or qualifying party pass a written exam
3. If a contractor represents a corporation, articles of incorporation and a certificate of good standing from the Department of Assessments and Taxation must be submitted
4. Provide proof of current $50,000 liability insurance must be filed with the application for licensure;
5. Pay a license fee which includes a fee to the Contractors’ Recovery Fund.

(For more information, visit the Maryland Home Improvement Commission site.)

Delaware, on the other hand, requires a state business license and a local license for each jurisdiction. For instance, there is a license for the town of Bethany Beach, a different license for Ocean View, and another for Fenwick Island. There is no “Home Improvement” license in Delaware, so if the contractor is not licensed in another state, you may have to rely on references from former clients and other local professionals.

Using an unlicensed contractor to save money is never a good idea. The potential for unnecessary stress and liability for you, the owner, is never worth it.