Buying a home, for many people, is the largest investment made in their life. Many homeowners look for the lowest price to build or remodel a home. However, one just can't buy some tools and start offering building or remodeling services.

Unlicensed contractors are typically not insured or bonded. They do not contribute to the residential contractors' recovery fund nor do they pay unemployment compensation for workers. They undercut the prices of licensed contractors by avoiding minimum standards. It may seem like a good way to save money, but homeowners put themselves at risk.

Let's talk about what some of these things are:

• Contractor Licensing — The business or individual meets Arizona State Contractors minimum standards of knowledge and competency.
• Liability Insurance — Protects the homeowner if the contractor causes damage to the home.
• Worker’s Compensation Insurance — Pays if there is an employee injury on the job. Without it, homeowner’s insurance may cover the cost to pay the worker’s claim.
• Bonding — Secured money that acts as a guarantee the contractor will perform the work. The bond pays the homeowner in the event the contractor fails to perform.

Moreover, the licensed contractor must have a minimum amount of experience and pass a business management test. The applicant may need a criminal background check, and may not have any unsettled contracting complaints.

There are many would-be contractors out there. They are individuals who may have worked in construction for a short time but then decided to start their own business. They don't have the startup capital needed to create a legitimate company, nor are they experienced. Despite this, they print business cards and flyers, start placing ads, and off they go.

If a homeowner experiences an issue with a licensed contractor, they have significant protections that do not exist with an unlicensed contractor. One can file a complaint against the contractor's license. Many times, this option is available for two years after completion of the work or the owner takes occupancy. The contractor license provides a guarantee if work does not meet code or is below standards.

If you would like to talk more about contractor licensing, or anything else, please contact us .