Perils of Not Hiring a Licensed and Insured Contractor

Some things never seem to amaze me. As I was watching the local news, there was a report of a couple that had contracted to have their roof repaired. They had given the roofing contractor quite a chunk of money up-front to perform the work. Now the roofing contractor did some work, but, after a few days, disappeared with the money and materials that had been purchased with their money. As the reporters were trying to help the couple recover their hard-earned money, they discovered that the roofing company didn’t have a license, no insurance to speak of, and, worse yet, this company didn’t even exist legally. The couple had mentioned that the quote they had received for the work that was to be done was about 25% lower than another company that had given them a quote from a man who seemed nice and knew what he was talking about. You know, there is an old saying, if something is too good to be true, it probably isn’t! A quote for repairs that is significantly below others should be a red flag, meaning you need to do some serious investigating to see why. In this case, the couple did no investigation and did not make any inquiries about the company they chose, and they ultimately paid a very heavy price.

Make Sure Your Contractor is Licensed and InsuredWhen choosing a contractor for your specific job, the first thing to do is check the Arizona Registrar of Contractors to see if the contractor is indeed licensed. Also, on that site, it will also show if the contractor has had any complaints or fines and exactly what his license was issued for. For example, if you were hiring a contractor for a plumbing job, you want to make sure he is licensed for plumbing and not find out later when something went wrong that he was not licensed for it. Also, don’t take the first bid; get at least 3 bids to compare. Remember, if one bid seems low, say 20% or more lower than the others, investigate and find out why. Are they using quality materials and including everything that needs to be done in the quote. Read the fine print of all the bids you receive to make sure you are comparing apples to apples. Ask for references from all the bidders, and make sure you follow up with the references. Ask as many questions as you want until you feel you have gotten all the responses necessary to make an informed decision. Also, get everything in writing and signed by the bidder. By doing this, you will have a record of everything you talked about and agreed to, what the project will entail, and what the final total price will be. In addition, it’s a good idea to have the contractor include a time frame to complete the project. Once you choose a contractor, set up a pay schedule. Start with a small down payment with additional funds released as the project moves forward, is properly inspected, and work done to your satisfaction. Also, reserve you final payment until all work has been completed with a final inspection. You shouldn’t be stuck with unfinished work with the contractor holding all your money. One area that is just important as the others I have talked about previously is making sure your contractor carries all the proper insurance. The first coverage that the contractor should carry is General Liability Insurance. It is imperative that the contractor provides you with a certificate of insurance showing his coverages. Also, you may want to contact the insurance agency that issued the certificate and make sure that the coverage is current, has not been cancelled for nonpayment, and the insurance provides coverage for the job that the contractor is performing for you. If your contractor is going to sub out some of the work, make sure you get certificates of insurance from the subcontractors as well. In addition, if there are other workers besides the main contractor, make sure you get a current certificate of insurance as evidence of their workers compensation coverage. Whether you are doing a major remodeling project or building a new custom home, having builder’s risk insurance is a must. By taking the proper precautions in hiring an Arizona licensed and insured contractor in the beginning, can save you from a major headache in the end if you don’t.

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PJO Insurance Brokerage
4103 E. Prickly Pear Trail
Phoenix, Arizona 85050
Office: 480-248-7495
Fax: 480-248-7493

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