The Bel Air attorneys at SMLH explain the importance of hiring licensed insured contractors.
It’s home improvement season. Unless you are a skilled handyman, a new deck, a remodeled bathroom, or a finished basement require a contractor to successfully complete. But finding a reliable contractor is not an easy task. From scams to inferior workmanship, there is no shortage of building contractor horror stories.
Homeowners who hire unlicensed and uninsured contractors are putting themselves at great financial risk. Here are just a few of the potential liabilities of hiring the uninsured contractors:
Unlicensed usually means uninsured. Uninsured contractors have no way of reimbursing homeowners for any property damage they cause while performing the job. As a result, homeowners could end up paying for the repairs themselves. Also, remember that repairs are not the only concern. If the contractor is injured while on the job, the homeowner could be subject to a lawsuit by the contractor and held liable for the contractor’s medical bills.
No coverage under homeowner’s insurance policy. Do not assume that any damages the uninsured contractor causes will be covered under homeowner’s insurance policies. Most policies state that only licensed contractors can complete work done to the property. Some policies explicitly exclude coverage for damages caused by uninsured contractors.
Noncompliance with building codes. Whether imposed by a housing association or local ordinance, many home improvement projects require permits and inspections. Unlicensed or uninsured contractors are often unfamiliar with the applicable building codes, and thus are unable to obtain permits. This often becomes a hassle for homeowners when it comes time to sell their home.
Poor quality work. Sloppy work can cause serious structural problems to the home and, in turn, can become a danger to those residing in the home. Of course, not all uninsured contractors do substandard work. And, not all substandard work is performed by uninsured contractors. However, it is important for homeowners to keep in mind that unlicensed and uninsured contractors aren’t subject to meeting industry-specific standards.
Scams. Home improvement scams are common, especially as the weather warms up. People who pose as qualified contractors often promise unrealistically low prices. They may not have references and cannot provide a contractor’s license, permits, insurance or bonding information. Homeowners may be left with incomplete or poor quality work with no compensation for the money lost.
Limited remedy for broken contracts. Disputes between homeowners and licensed contractors are typically remedied through the contractor’s licensing agency. Many licensing agencies offer mediation services or maintain a guaranty fund to help consumers recover their losses. They also have the authority to suspend or revoke a dishonest contractor’s license. However, these actions cannot be taken against unlicensed and uninsured contractors. In these cases, homeowners find that their only alternative to recover losses is through a civil lawsuit.
Put the odds in your favor by ensuring your contractors are insured. Verify the license and insurance information with the contractor’s carrier. Homeowners must confirm the contractor’s insurance policy to see if their specific type of home improvement project is covered. For more information about construction, contract and insurance law, please contact the Bel Air attorneys at SMLH.