What does it mean to hire a licensed, bonded and insured contractor?
Let’s face it, every one of us homeowners wants to do business with a reputable company who will deliver what they promise. We want quality work at a fair price and we want that customer service to be top notch. Hiring a contractor with the right certifications and credentials can be the difference between a happy hiring experience and a home improvement nightmare we all know too well.
Doing your homework as a homeowner is a super important step in the hiring process and luckily for you, we take care of all that by screening every single one of our home professionals. Besides the certifications and credentials we verify, all home professionals must agree to the Kijenga Pledge, ensuring the standard we set is at the highest right from the start.
That being said, what does it mean to hire a contractor that is licensed, bonded and insured?
Let’s start with licensing. If you’re confused about if a contractor you are hiring is licensed, you’re definitely not alone. Here in Saskatchewan, there is a set standard for a contractor to follow the rules and regulations. A contractors license generally involves a registration with the license-issuing agency and includes proving the contractor holds the minimum insurance and/or bonding as required by the municipality. Oftentimes, a license is required for a contractor to pull a permit at the local building department. Contractors are able to purchase a business license directly from city hall.
Licensing protects the homeowner be helping ensure that contractors meet the minimum insurance requirements. By hiring a contractor that is not licensed, it can cost you in a number of ways. For example, if your project required a building permit and your contractor was to pull one but failed to do so by being unlicensed, a city building inspector may stop the work until he or she is satisfied a licensed contractor has obtained the proper permits.
If you do end up hiring a contractor outside of Kijenga that is not licensed, you must understand the issues that may arise. If a problem with the project occurs after the work is completed, you may find yourself “shit outta luck”.
It should be noted that there are trade-specific licenses for electricians, plumbers and HVAC technicians. These contractors require much more specific knowledge and experience than basic contractor licenses.
A contractor obtaining a trade-specific license often means that they have completed a minimum number of hours of working experience as an apprentice in the trade and that they have completed and passed a standardized test based on their trade. They will likely complete continued education courses to renew their license and keep it valid along the way.
What does it mean if my contractor is bonded?
Depending on where you live, contractors may be required to be “bonded” in order to obtain a license. That is not the case here in Saskatchewan. That being said, if a contractor is bonded it means they must purchase a surety bond which acts as a form of insurance to protect you the homeowner if he or she fails to complete the job properly or fails to pay for permits, sub-contractors or other financial commitments.
Bonding requirements will vary from province to province and city to city so it’s in your best interest to know the rules where you do live.
It is important to note that most homeowners don’t realize that a contractor’s bond may also protect them from being held accountable with an unpaid supply bill or the cost of unpaid workers that were hired for the job. One step further, a bond could cover any damage to the property as a result of a contractors negligence. If there is lost or stolen property, this bond is your best friend.
The agency involved in the bond is usually a surety company, which requires the contractor to pay regular premiums to continually renew the bond. These premiums are factored similarly to insurance plans, as they take into consideration both the amount that the bond covers and the history of the contractor.
To receive monetary compensation for an unsatisfactory performance, a homeowner would have to contact the surety company and provide proof that the job was incomplete or that the contractor failed to pay for materials or other obligations that were contractor’s responsibility.
Bonds are not only beneficial for the homeowner, but for the contractor as well, since there are people who won’t hire a contractor who doesn’t offer the protection of a bond. There are many suppliers and subcontractors who will only work with a contractor who has a bond in place as well.
To determine whether or not your contractor is bonded, ask him or her for a bond number and certification. You should take extra precautions to ensure that both the bond and the license are up to date as well. At Kijenga, we don’t require a Kijenga Pro to be bonded but there are many that carry the certification.
Why does insurance matter?
Most provinces require that contractors demonstrate proof of insurance as part of obtaining a trade license. Insurance for a contractor will typically fall into two main categories. There is liability insurance and workers compensation.
- Liability — Covers property damage and injuries caused by the contractor’s work. It will not normally pay the cost of repairing or replacing bad work; that’s the purpose of the bond.
- Workers’ compensation — Provides payments to injured workers, without regard to who was at fault in the accident, for lost wages and medical services. It also provides benefits to the contractor’s family in the event of death. If the owner is the only employee, WCB may or may not be required, depending on the province. Here in Saskatchewan you don’t require WCB if you are the only employee of the company.
Without these types of contractor insurance, consumers could end up paying out of their own pocket if their homeowner’s policy is insufficient to cover the bills should a contractor become injured or an accident occurs on the consumer’s property.
Any home professional you hire should be insured. All Kijenga Pros carry insurance as per our certification and screening process so you can feel comfortable in those contractors you do hire through Kijenga.com.
Here is common terminology for you.
Licensed: Contractors have been granted a trade license as mandated by provincial and local laws. It generally requires passing competency tests about business practices and trade skills, paying a fee and proving insurance and/or bonding.
Registered: Typically less stringent than licensing, it often requires contractors to prove insurance and pay a fee, only sometimes requires bonding and rarely tests competency. A few places use licensing and registration interchangeably.
Bonded: Contractors have an arrangement with a third party (a private bond issuer or a recovery fund held by the licensing municipality). Homeowners may petition for reimbursement through that third party if contractors harm them financially because of shoddy work or failure to pay subcontractors as promised.
Insured: All contractors you hire should be insured. If you’re hiring a contractor outside of Kijenga, ask to see a Certificate of Insurance, then call to verify the policy is current and has enough coverage for your project.