Decoding Contractor Lingo
Selecting a contractor to perform work on your home is no small matter. This person, and persons in their employ, will be in your house tearing away at old bits and creating new ones. Certainly, the vast majority of contractors are honest and hard-working folks, and will deliver the type of craftsmanship your home deserves. That said, there is a lot of industry jargon in which it’s easy to get lost. To protect your home and family, it is important to know the differences when it comes to professional qualifications and liability coverage.
Below is a short primer on the subject. This is in no way an exhaustive resource, and we’ve included a few links at the bottom for further reading.
A certification can be issued by just about any group, business, or other entity. A certificate simply means that a contractor has met the requirements of the organization that issues the certificate. This could mean they’ve passed a test, or been in business long enough, or maybe they simply paid for a certificate from a slightly shady website. Just because someone claims to be “certified” by the Mickey Mouse Club as a Mouseketeer, it does not make them qualified to work on your home.
The leading and most credible organizations that certify contractors and remodelers are listed below. 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 — Is dedicated to developing model codes and standards used in the design, build and compliance process to 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 — This certification requires extensive knowledge of the industry, a commitment to professional conduct, and to have been actively involved in the remodeling industry for at least two to five years. Only full-time remodeling professionals can attain certification, and 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.” These are issued by a government entity 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 simply 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 is insurance that covers any accidental damage done to your home or property as a result of the work being performed. For example, a trailer is backed too far and too fast into your driveway and slams right into your garage door, damaging it beyond repair.
Bonding can be a tricky subject and there can be many various legal stipulations that are included in these. For larger, more intricate remodeling projects, we highly recommend you talk with your lawyer to ensure you’ve covered in any eventuality.
Essentially, bonds, warranty bonds, or surety bonds, are financial assurances from a “Surety Company” that protect an entire project. The most common way a homeowner sees this come into play is as a “warranty bond,” which is a guarantee that any work defects found in the original construction will be repaired during the bond’s warranty period. If the contractor can’t fix the defects or repair the construction work, or if your contractor goes 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“