Contractor Licensing and Insurance: What to Verify Before You Hire

General liability insurance is what pays out if the contractor's work damages property beyond the job itself, or injures someone who isn't an employee -- a fire started by a torch, a flooded floor from a supply line the crew was working on, a delivery driver or neighbor hurt on site. It's built to cover the contractor's negligence, not to guarantee the quality of their work.

That distinction matters: if a contractor tiles a floor badly, that's a workmanship dispute you handle through the contract, not a liability claim. What actually extends this coverage to protect you directly is an additional insured endorsement -- ask to be added to the policy for the length of the project, including both ongoing-operations and completed-operations coverage, so you're protected during the work and after it wraps up.

Workers' comp covers injuries to the contractor's own employees, not your property. But if a worker gets hurt on your job and the contractor doesn't carry workers' comp, that worker can end up filing a personal-injury claim against you, the homeowner -- because without a covered employer standing behind them, the property owner can become the target instead.

This is the coverage people skip checking most often, because it feels like the contractor's problem. It isn't. A single serious injury claim with no workers' comp behind it can turn into medical bills and lost-wage claims you're personally on the hook for.

An unlicensed, uninsured contractor typically has no way to pay you back if something goes wrong -- there's no policy behind them to cover property damage, and many homeowner's insurance policies won't cover damage tied to work performed by an unlicensed contractor, especially if you knew that going in.

You also lose your consumer protections. Licensed contractors generally answer to a state licensing board, which can field complaints, and many are bonded, giving you a path to recover money if work is abandoned or seriously botched. Go unlicensed and that recourse disappears -- your remaining option is a civil lawsuit, which is expensive with no guarantee of ever collecting.

Most states run some kind of state-level licensing program for general contractors -- typically an application, an exam for a qualifying party, and sometimes a background check. But a real number of states issue no state-level general contractor license at all, and leave licensing or registration entirely to individual cities and counties instead.

That means there's no single place to check a license, and no single answer to whether one is even required. Search for your own state's contractor license lookup before you assume either way -- and if your state doesn't run one, ask your local building department what it requires instead.

Get the contractor's license number, then look it up yourself through your state's official licensing lookup (or your local building department, where licensing is handled locally) -- not a screenshot or PDF the contractor hands you. Confirm the status reads active or current, not expired, suspended, or revoked, and that the license classification actually covers the work you're hiring for.

Do the same for insurance. Ask for a Certificate of Insurance showing both general liability and workers' comp, then call the insurance company or agent listed on it directly and confirm the policy is currently active and covers this kind of work. This is the step people skip, but it's the one that matters most -- a lapsed or fake certificate looks identical to a real one until you actually make that call, and it costs you nothing to make it before work starts.