All contractor advertisements—whether it be an ad in the phone book or newspaper, a flyer that shows up at your front door, or the company's name on the side of a truck—must have the contractor's state license number. You can check the license status online or call (800) 321-CSLB (2752).
REMEMBER Most licensed contractors are competent, honest, hardworking and financially responsible. However, most of the problems CSLB sees could be prevented if homeowners knew their home improvement rights and took responsibility for their project. A responsible and informed consumer can work more effectively with reputable contractors, and avoid being victimized by unscrupulous or unlicensed operators.
Shop around before hiring a contractor Get at least three written bids on your project, and make sure you're comparing bids based on identical plans, specifications, and scope of work. Do not automatically accept the lowest bid. In fact, you should beware of any bid that is substantially lower than the others. It probably indicates that the contractor made a mistake or is not including all the work quoted by his or her competitors. You may be headed for a dispute with your contractor if you accept an abnormally low bid. It also is possible that a low-bidding contractor may cut corners or do substandard work to make a profit.
When the contractor comes to your house to give you a bid, ask to see his/her pocket license, along with a picture I.D. Make sure the person you're dealing with is the same person on the license. Contractors also can hire salespeople to work for them. Ask to see the registration card, along with a picture I.D. REMEMBER Contractors are required to have their license number on their business card and on all bids and contracts. Seeing a license number doesn't necessarily mean the license is valid. Check the license status. Although an unlicensed operator may give you a low bid, the risks of possible financial and legal consequences outweigh any benefits a lower bid may seem to offer.
Ask for personal recommendations Friends and family recently may have had similar projects completed. If they are satisfied with the results, chances are you will be, too. Local customers, material suppliers, subcontractors, and financial institutions are good reference sources to check whether the contractor is financially responsible. If you are still unsure, you also may wish to check the contractor out with your local building department, trade association or union, consumer protection agency, consumer fraud unit, and the Better Business Bureau.
Verify the contractor's business location and telephone number. Make sure your contractor has a current business address and telephone number. A contractor who operates a business from the back of a pickup truck with a cellphone may be difficult to find if a job needs to be fixed after the last bill is paid. You can find a licensed contractor's "address of record" when you look up his/her license status.
Verify the contractor's workers' compensation and commercial general liability insurance coverage Ask to see a copy of the Certificate of Insurance, or ask for the name of the contractor's insurance carrier and agency to verify that the contractor has insurance. In California, if a contractor has employees, he/she is required to carry workers' compensation insurance. The importance of this cannot be overstated. If a worker is injured working on your property and the contractor doesn't have insurance, you could be financially liable to pay for injuries and rehabilitation. Your homeowner's insurance may or may not cover those costs. You should check with your insurance carrier to make sure the workers' compensation insurance coverage being provided by the contractor is adequate. Learn more from the California Department of Insurance.
Commercial general liability insurance is not required; however, it covers damage to your property. If the contractor does not carry general liability insurance, he/she should be able to explain how damage or losses will be; otherwise you or your insurance company could end up paying for damages. A licensed contractor must provide you with information regarding both types of insurance in your written contract. ALERT All C-39 roofing contractors (whether or not they have employees) must carry workers' compensation insurance or have a valid Certification of Self-Insurance on file with CSLB. This information is indicated when you review the status of a contractor's license.
California licensed contractors are required to have a contractor license bond. It's important to know what bonds do and do not cover. Some bonds are designed to protect you against substandard work that does not meet with local building codes. Bonds do not assure the financial or professional integrity or competency of a contractor. Institutional lenders such as savings and loans, insurance companies or commercial banks generally require licensed contractors to secure bonds for large jobs. Bonds may be classified as: Contractor License Bonds Licensed contractors are required to have a contractor license bond of $15,000. This bond covers any project the contractor agrees to perform. Be aware: this bond is often not enough to cover multiple complaints made against it or your project if it's worth more than the value of the bond. Contract bonds guarantee both the completion of the job and payment for all labor and materials. In general, the bonding company will not have to pay more than the face amount of the bond. The cost of this bond is usually 1-2 percent of the contract price.
By law, a contractor cannot ask for a down payment of more than 10% of the contract price on a home improvement project or $1,000, whichever is less. There is one exception to this law: if the contractor has secured a "Blanket Performance and Payment Bond" and it is on file with CSLB. This is a bond in the amount sufficient to cover all outstanding contracts open at any one time. A contractor with this bond on file can require the entire cost up-front. This type of bond is is generally used only by high-volume companies. There are only about two dozen licensees with a Blanket Performance and Payment Bond.