Decoding Contractor Lingo & Protecting Your Home
Selecting a contractor to perform work on your home is no small matter. Certainly, the majority of contractors are honest, hard-working people. They are expected to deliver the craftsmanship your home deserves. However, this is not always true. To protect your home and family, it is important to know the difference between professional qualifications and liability coverage.
Below is a short text on the subject. This is in no way an exhaustive resource. We’ve included a few links at the bottom for further reading.
Almost any group, business, or other entity can be issued certification. A certificate means that a contractor has met the requirements of the organization that issues the certificate. Perhaps they passed a test or the business is credible. Moreover, they could have simply paid for a certificate from a slightly shady website. Just because someone claims to be “certified”, it does not make them qualified to work on your home.
Listed below are the leading and most credible organizations that certify contractors and remodelers. Many jurisdictions require certification by at least one of these organizations to receive a license. Check with your state agency or city hall.
The International Code Council
The International Code Council develops model codes and standards for design, build and compliance processes. Furthermore, the developed codes construct safe, sustainable, affordable and resilient structures. Fifty states and the District of Columbia have adopted ICC Code standards at the state or jurisdictional level.
The National Association of the Remodeling Industry
A NARI certification requires extensive knowledge of the industry and a commitment to professional conduct. Additionally, it requires persons to ha
I’ve been actively involved in the remodeling industry for two to five years. Only full-time remodeling professionals can attain certification. Additionally, each one must pass a written exam which is reviewed individually by the NARI Certification Board.
To quote the ICC website, “A license is a permit to work in a particular occupation, issued as a result of state or local legislation.” A government entity issues a license for a business or person to legally operate within their jurisdiction. Licenses may be national/federal, state, county, and/or local. Depending on where you are and what type of work you’re having done, your contractor may need all or none of these licenses.
Beyond allowing a contractor to work in your area, a license often includes proving the contractor has a certain level of insurance coverage and/or bonding. Often, having a city license is a requirement for a contractor to “pull a permit” at city hall or your local municipal building department.
Insurance comes in many forms for contractors, but these are the crucial areas for homeowners are:
Personal Liability for themselves, so that if they get injured on the job site (i.e. your home), they are covered by their own insurance agency instead of hoping that your homeowner’s policy covers injuries to people working on your home.
Worker’s compensation to cover any injuries sustained by the contractor’s employees and/or subcontractors. Just like personal liability, but for everyone else working on your property. Make sure to note if their Workers Comp doesn’t cover subcontractors, that each one your General Contractor brings in has their own Personal Liability and Workers Comp as well.
Property Damage Coverage
Property damage coverage is insurance that covers any accidental damage done to your home or property as a result of the work being performed.
Bonding can be a tricky subject and there can be many various legal stipulations that are included in these. For large, complex remodeling projects, we recommend you talk with your lawyer to ensure you’ve covered in any eventuality.
Bonds, warranty bonds, or surety bonds, are financial assurances from a “Surety Company” that protect an entire project. Warranty bonds are most common in remodeling projects. They guarantee that any work defects found in the original construction are repaired during the bond’s warranty period. If the contractor can’t fix the defects or repair the construction work, or they go out of business, your money will be reimbursed.
Federal Trade Commisson: Hiring a Contractor
Small Business Association: Surety Bond Basics
Angie’s List: Legal Aspects of Working With Contractors
Bankrate.com: What It Means To Be Bonded, Licensed & Insured