Frequently Asked Questions » How Do I Find Out if a General Contractor is Licensed, Bonded, and Insured?
How Do I Find Out if a General Contractor is Licensed, Bonded, and Insured?
When choosing a general contractor in Orange County, you can verify if their license is active and in good standing by visiting the California State License Board’s website and doing a license check. A contractor’s listing on the CSLB website will tell you several things about the company. First, it will tell you how long a company has been in business. It will also tell you if there have been any official complaints filed against the business.
If a contractor has a license that is active, they will have a contractor’s bond, which will also be listed on the CSLB website. A contractor’s bond protects you, the consumer, against contractors who fail to complete a project or who do shoddy work. If a contractor fails to complete a project according to the contract’s specifications, you can file a claim against their bond. If you win, you will be compensated for your losses from the bond company.
Insurance is another thing to look for in a general contractor. There are a few types of insurance that apply to general contractors. The first is workers compensation insurance. If a general contractor has employees, the company is required to have workers compensation insurance to cover their employees in case they are injured on the job. Not all general contractors are required to carry workers compensation insurance. If the company doesn’t have employees, but uses subcontractors to help complete projects, they don’t necessarily have to carry this type of insurance. General contractors may also have liability insurance, which would cover them for any damages done to a client’s property. It won’t be listed on the CSLB website if a general contractor has liability insurance or not. If this is important to you, ask your general contractor for proof of liability insurance.
What a Contractor’s License Tells You (and What it Doesn’t)
When a contractor is licensed, it tells you a few things. First, it tells you that they have gone through the proper channels to be legally allowed to do work in the State of California. They have passed the state’s test and have proven they have experience in the construction industry. It also ensures that they have a bond, which is a bit of an insurance policy for you as a homeowner, should things go badly.
What a license doesn’t tell you, however, is if the contractor will do quality work for you and whether or not the contractor will stay within your stated budget or complete your project in a timely manner.
As a general contractor who has been in the business for many years, I have witnessed my share of projects done by others that were poorly managed and executed. This caused me to wonder how a contractor could continue in this way and still maintain an active license with the CSLB. I actually contacted the CSLB, and their response to this was that it is not illegal to perform poor quality work. It is also not illegal to underestimate the cost of a project or to underestimate the amount of time it will take to complete a project. I then asked the representative at the CSLB what a homeowner’s recourse would be if they encountered a general contractor who did these things. Their response was that it was the homeowner’s responsibility to verify the contractor’s ability (not the CSLB’s) and that the best way to do this is to contact previous customers.
The sad truth is that once a homeowner has chosen the wrong contractor, and the project has progressed to a place of disagreement, the options for cutting ties are not great. A homeowner can stop payment, but this would typically result in the contractor stopping all work and placing a lien on the property. In the meantime, when the homeowner tries to hire a new contractor to complete the project (assuming the homeowner has the funding to do so), it is often difficult to find a contractor to take on a partially completed project. The new contractor, by law, must assume full responsibility for all work previously done by the terminated contractor. Understandably, this is a position most qualified contractors will not put themselves in.
We say all this not to scare you, but to underscore the importance of finding an honest and skilled general contractor from the start. Do your homework! Talk to previous clients. Read reviews. Don’t assume that just because a general contractor is licensed that they will do the work to your standards.