Hiring a contractor is one of those decisions that doesn’t feel risky until it is. You assume they’ve handled permits before, that their team is covered on your property, that they’ll stand behind the work. Then, at the first request for documentation, they hesitate. Maybe they promise to send it “tomorrow,” or hand you a photocopy that looks like it was last updated during the flip-phone era. This is the moment that separates manageable projects from costly headaches. The good news: you don’t need to guess. There’s a practical way to handle it that protects your money, your home, and your schedule.
Why licensing and insurance matter more than a handshake
Licensing isn’t a hoop to jump through. It’s the state’s way of ensuring a baseline: that the contractor knows building codes, passed required exams, and hasn’t been barred from practicing for fraud or safety violations. In many states, a license also signals that the contractor can legally pull permits for your project. If you allow work that should be permitted to proceed without it, you risk stop-work orders, fines, and, if you sell your home later, disclosures that can scare off buyers or lead to price reductions.
Insurance has a different job. General liability covers property damage and injuries to others caused by the contractor’s work. Workers’ compensation covers employees who get hurt on the job. If a contractor lacks either and someone falls or a pipe bursts and floods your living room, the claim can land on your homeowner’s policy, and you might be responsible for deductibles, premium hikes, and uncovered losses. On a $75,000 kitchen, a single mistake can cost five figures to fix.
In many regions, bonding adds another layer. Bonding doesn’t guarantee good craftsmanship, but it does create a pool of funds a client can claim if the contractor fails to complete the job or pay subcontractors and suppliers. Not every project requires bonding, yet for large projects and public work, it is standard. The phrase licensed bonded and insured contractors became a shorthand for “we’re legitimate.” It only means anything if it is true on paper.
First sign of a problem: hesitation or incomplete documents
The warning signs tend to look the same across trades. A contractor who is on the level will email or text a copy of their license and certificate of insurance within a day, often within hours, and they won’t get prickly when you ask. When you encounter resistance, pin it down with specifics.
Ask for three things, and insist they come directly from the source or include verifiable details:
- License number and issuing authority, plus exact company name. Certificate of insurance naming you as certificate holder and, for larger jobs, listing you and any lender as additional insureds. For projects above a certain threshold or where required, proof of bonding that references your project or the contractor’s bond number and surety company.
Those items should align with the name on your contract and the party pulling permits. If they don’t match, slow down. Misalignment is common when a sole proprietor bids under one name, holds a license under another, and uses a buddy’s insurance. That patchwork can invalidate coverage.
How to verify a license without guesswork
Every state has a public lookup. Some cities and counties have their own. Start with the state’s contractor licensing board, then check your city’s building department if you live in a home-rule municipality.
When you search, look for:
- Status: active, expired, suspended, or revoked. Classification: does it match the scope of your work? A C-36 plumbing license is not a roofing license. Responsible managing individual: who qualifies the license? If that person isn’t involved with your project, the company may not have legal authority to perform the work. Disciplinary actions and citations: read them. Multiple violations for unpermitted work or failing to pay subs aren’t just history, they are likely to repeat.
When I managed a multiunit remodel, we shortlisted three electricians. One had good references but an expired license, “awaiting renewal.” He promised it would clear in a week. The state site showed an unresolved citation for operating while expired. We passed. Two months later, a neighboring project pulled his permit and ended up with a stop-work order and a scramble for a replacement. The extra week we took to verify saved six weeks of delay.
Insurance: what you need to see, and what it should say
A valid certificate of insurance is not a PDF dragged from a dusty folder. Ask the contractor’s broker to send a certificate directly to you. Most agencies do this same-day. The certificate should list:
- General liability policy with effective dates spanning your entire project. Limits appropriate to the size of your job. For single-family residential, $1 million per occurrence and $2 million aggregate is common. Workers’ compensation policy if anyone other than the owner will be on site. “Owner only” or “exempt sole proprietor” language matters. The correct legal name and address for the insured that match your contract.
If the contractor claims they use only subcontractors who carry their own coverage, that’s not protection. You still need proof that the general contractor has a policy. Otherwise, a sub’s lapse becomes your problem. Ask for subs’ certificates as well, or require the GC to collect and maintain them.
Two tactics prevent insurance surprises mid-project. First, ask for additional insured and waiver of subrogation endorsements, not just a certificate. The endorsements change the policy’s terms to include you. Second, calendar the policy renewal dates listed on the certificate. If your project runs long, request updated proof at least two weeks before expiration. Letting coverage lapse during demolition or framing is inviting trouble.
When your contractor can’t produce proof
You might be deep in planning when the dodges begin. You ask for a license number and get, “We’re renewing, it’s in process.” You ask for a certificate and you’re told, “My broker’s out this week.” You push again and receive a screenshot instead of a broker-issued certificate.
In practical terms, you have two options. Pause the project until proper documents arrive, or replace the contractor. Anything in between tends to drag problems forward.
If you want to give them a short runway, put it in writing. Set a deadline measured in days, not weeks. Make the deadline a condition for moving forward with permits and deposits. A reasonable note reads: “Before any payment or site work, please have your broker send a certificate of insurance naming me as certificate holder and provide your active license number by [date]. If not received, I will assume you are unable to proceed and will seek another contractor.” Direct, neutral, and clear.
Most legitimate contractors respond quickly. The ones who cannot, don’t. Their silence is a decision you do not need to debate.
Contracts and deposits: keep leverage on your side
Many disputes grow from a preventable mistake: paying before verifying. If your contractor cannot prove they are licensed and insured, do not release a deposit. In some states, collecting a deposit while unlicensed is itself a violation that can entitle you to rescind and recover funds. Even in states without those rules, money out the door reduces leverage when you might need it most.
A clean contract helps. Key terms should include the legal name and license number of the contractor, a requirement to maintain insurance with stated limits and endorsements throughout the project, a clause allowing you to suspend work and payments if proof lapses, and a schedule of progress payments tied to milestones you can actually inspect. “Framing complete” is better than “Week two payment.”
One practical point that pays off: require that the party signing the contract is the same entity that holds the license and insurance. If your agreement is with “Joe’s Remodels,” but the license is held by “JR Builders LLC,” you’ve created unnecessary risk. Names matter when you file a claim or attempt recovery.
Permits, inspectors, and your role
Homeowners sometimes worry that asking too many questions will annoy the contractor or slow the job. The people who do this right are not bothered. If anything, they appreciate a client who understands the stakes. Before demolition, ask Axcess Surety reviews who will pull the permit. If your contractor is not licensed to pull the permit, that is an answer. Occasionally, homeowners pull permits directly, but that changes who is the responsible party in the eyes of the building department. It can also void the contractor’s insurance if the work falls outside their scope or requires a licensed party to oversee it.
Inspectors are not your enemy. They’re a second set of eyes whose job is to enforce code and protect safety. If you discover your contractor isn’t licensed after work begins, talk to your building department. Explain the situation and ask what can be salvaged. Some jurisdictions will allow a licensed contractor to take over an existing permit, then schedule a re-inspection at the next logical stage. Others will require opening up closed walls. It is better to make that call early than to hope it slides.
If you already signed and work has started
This is the toughest scenario. You have a half-demolished bathroom and a crew that may not be properly credentialed. Resist the impulse to let it slide, because the situation rarely self-corrects.
Gather facts first. Request documentation again, this time with a 24 to 48 hour deadline. Put a hold on future payments until the documentation arrives. Photograph current conditions and keep copies of every drawing, change order, and text message. If the contractor still cannot produce proof, suspend the work in writing. Lock up your home. Change alarm codes. Remove materials you purchased.
Next, bring in a licensed contractor for a paid consultation to assess what’s been done. You are buying a professional opinion on safety and code compliance. If errors are found, document them with photos and a brief summary. That record helps in negotiations, claims, and, if it comes to it, small claims court.
Finally, address legal exposure. If anyone is injured, call your insurer immediately. If you used a credit card for deposits, ask your issuer about dispute timelines. If your state restricts unlicensed contracting, you may have additional remedies. An hour with a construction attorney can save months of grief. They can draft a demand letter that requests a refund, sets terms for site access to remove tools, and notifies the contractor to cease work.
The cost of walking away versus pushing forward
Clients sometimes stick with an unverified contractor out of sunk costs or schedule pressure. They reason that the walls are open, materials are ordered, and starting over will be worse. In practice, pushing forward with someone you can’t verify usually costs more. If there is a serious defect or injury, your homeowner’s policy may limit coverage, and you will pay the deductible and face potential nonrenewal. If the job fails inspection, you will pay someone else to redo it. If the contractor disappears, you will chase them for damages you may never collect.
Walking away isn’t free. You will pay for idle time, re-bids, and possibly to redo work. The difference is that those costs lead to a finished product you can insure and get inspected. That has real value when you refinance or sell, and it reduces long-term risk.
How reputable pros handle documentation
There is a pattern among the contractors I like working with. They include license and insurance information in their proposal packet. The certificate arrives from their broker before you ask. If you request to be added as an additional insured, they grant it without debate and forward the endorsement within 24 to 48 hours. When you ask about permits, they explain the process and outline which inspections will occur and when. Their subs are known quantities, and they keep current certificates on file for each. If something lapses, they stop work until it’s corrected. They don’t bluff.
That posture signals more than compliance. It tells you how they’ll handle unforeseen issues. If a beam is undersized, they’ll fix it, not hide it. If a city inspector is behind, they’ll adjust the schedule instead of pushing drywall over open plumbing. Documentation is a proxy for discipline.
Special cases and common excuses
You will hear the same explanations repeatedly. Some are legitimate in narrow contexts, most are not.
“I’m a handyman, so I don’t need a license.” Scope matters. States typically allow minor repairs and maintenance without a license, often with dollar limits and exclusions for trades like electrical, plumbing, and HVAC. A handyman can patch drywall. They cannot legally rewire your kitchen or replace your water heater in most jurisdictions. If the job involves structural changes, gas lines, or service panels, stop.
“I’m insured through the company I subcontract for.” Insurance does not flow downhill unless explicit. If your contractor is functioning as a general and bringing subs, the general needs their own coverage. Subs need theirs. A blanket statement without documents is not coverage.
“We’re waiting on the renewal from the state.” Expired means Axcess Surety expired. Some states allow a short grace period for renewal, but work performed during a lapse can still be considered unlicensed. If a contractor is comfortable working while lapsed, that is a clue.
“My insurer can’t add you as an additional insured.” Some policies exclude residential projects or certain trades. That is not your problem to solve. If they cannot add you, they likely do not have the right policy for your project.
“The homeowner can pull the permit.” You can, but it shifts responsibility. In some places, a homeowner permit also requires you to supervise the job and certify compliance. If the contractor is telling you to pull the permit to bypass licensing requirements, you are being asked to take on their liability.
Finding replacements who meet the standard
If you need to pivot, invest two focused days. Call three to five firms whose websites list license numbers and actual staff, not just a mobile number. Ask your building department for a list of contractors who have pulled permits for similar projects in the last year. Walk your neighborhood and note jobsite signs. Ask suppliers, not just friends, who pays on time and runs a clean site.
During screening, watch how they respond to a basic script: “Before we meet, please have your broker email a certificate of insurance and share your license number so I can look it up.” The ones who do this easily become your short list. The ones who call it “a lot of paperwork for a small job” remove themselves gracefully.
When you meet, talk scope and schedule, but also their process for subs, permits, and inspections. Ask how they handle change orders and show a small example to gauge transparency. If your project is large, call their surety and ask if they are bondable and at what capacity. A contractor who can’t be bonded at all for a modest project may be running too thin.
If you must proceed under a tight deadline
Sometimes you don’t have the luxury of weeks. A leaking shower pan, a damaged main panel, a child’s bedroom with a mold bloom from a roof leak. Emergencies compress decisions. In those cases, adjust the scope to what is legally and safely possible without shortcuts. Authorize only the minimum work required to stabilize the situation while you verify credentials. A licensed plumber can cap a leak and make it safe in a day. You don’t have to sign a full bathroom remodel contract at the same time.
Pay for emergency work by credit card if possible. Keep receipts, photos, and documentation. Set a second appointment for a full proposal, and only move forward when the papers are in hand. Urgency is not a reason to relax standards. It is a reason to focus them.
Insurance claims and your homeowner policy
If something goes wrong while an unlicensed or uninsured contractor is on site, call your insurer early. They will ask for the contract, invoices, and any correspondence. Be factual, not emotional. Provide photos and a timeline. Your carrier may pursue recovery from the contractor or their insurer if any exists. If not, your coverage may still apply depending on the loss type, but you will have to meet deductibles and accept the claim on your record.
Some policies include exclusions that limit coverage for work performed by unlicensed contractors. Others don’t. Either way, your insurer will want to understand the circumstances. Early notice preserves options.
When to involve an attorney or the licensing board
Bring in an attorney when money is at stake that you can’t afford to lose or when safety issues arise. A demand letter from counsel often accelerates refunds or returns of materials. If your state has strong penalties for unlicensed contracting, your attorney may leverage those statutes to negotiate.
File a complaint with the licensing board if you suspect unlicensed practice or if the contractor refuses to remedy problems. Boards can impose fines, suspend licenses, and in some cases require restitution. Complaints also protect the next homeowner. It’s not vindictive. It is public accountability.
The simplest way to avoid this problem next time
Embed verification into your process. Before you schedule a site visit, ask for the license number. Before you sign, ask the broker to email the certificate. Before work begins, check the permit portal to confirm your contractor is listed. During the job, track insurance renewal dates. These small habits take minutes and prevent months of pain.
When you see the phrase licensed bonded and insured contractors on a website or truck, treat it as a starting point, not a finish line. Good contractors will meet you halfway. They value clients who treat documentation like seatbelts, not decorations.
A compact checklist you can actually use
- Ask for the license number and verify status, classification, and any discipline on the state site. Request a broker-issued insurance certificate with proper limits, endorsements, and dates that cover the entire project. Confirm the contract entity matches the license and insurance, and that the contractor will pull all required permits. Tie deposits and progress payments to receipt of documentation and clearly defined milestones. If proof is delayed or inconsistent, pause the project and replace the contractor before money changes hands.
The bottom line
Your home is likely your largest asset. The people you hire to alter it should be able to prove, within a day, that they are authorized and insured to do the work. If they can’t, your next move is simple: stop, verify, and, when necessary, walk. The frustration of resetting a project is temporary. The cost of trusting paper that never arrives is not.