Short Answer
Verify a contractor’s license and insurance by checking their license with your state or local licensing board, confirming their business name matches all documents, and requesting a Certificate of Insurance (COI) sent directly from their insurance agent showing current general liability and workers’ compensation coverage. For bigger jobs, ask for a bond and consider being added as an additional insured. Never rely on a photocopy alone—confirm with the issuer.
Why This Matters
Licensed and insured contractors protect you from fines, stop-work orders, and liability if someone gets hurt or your property is damaged. These checks take under an hour and can save thousands later. Even for small jobs, proper coverage reduces risk.
What You’ll Need
- Web browser and phone
- Contractor’s legal business name, license number, and phone/email
- Email access to receive documents
- PDF viewer (to read COIs and endorsements)
- Optional: document scanner app and a project folder or jobsite clipboard (ToolStash catalog) to keep records organized
Step-by-Step Verification
1) Confirm the license
- Ask for: license number, business name (legal entity), name of qualifying individual, and trade classification.
- Look it up: search your state licensing board (e.g., “California CSLB license check,” “Florida DBPR license search,” “Texas TDLR license search”). If your state doesn’t license that trade, check your city/county building department.
- Verify:
- Status is Active with no major restrictions.
- Classification matches the work (e.g., electrical vs. general building).
- Business name and address match the contract and bid.
- Disciplinary actions or complaints—read details.
- Local licenses: Some municipalities require separate registrations. Call the local building department to confirm.
2) Confirm insurance (request from the agent, not the contractor)
- Ask the contractor to have their insurance agent email you a COI directly.
- Required coverages for most jobs:
General Liability: $1,000,000 per occurrence / $2,000,000 aggregate
Workers’ Compensation: statutory (Employers’ Liability $500,000 typical)
Commercial Auto Liability: $1,000,000 (if vehicles on site)
Bond (if required by state/city): License bond $10,000–$25,000 typical
- Check the COI:
- Named insured matches the license and contract.
- Policy numbers, effective/expiration dates cover the project timeline.
- Agent’s contact info is present; call to verify.
- For projects over $25k or HOA/multifamily: request to be added as Additional Insured with Primary & Non-Contributory and Waiver of Subrogation endorsements (usually via CG 20 10/20 37 or equivalent).
- Workers’ comp: Verify for every worker on site. If the owner is exempt, ensure any employees/subs are covered. Ask for proof of coverage for subcontractors or require the GC to cover them contractually.
3) Confirm bonds and permits (as applicable)
- For states that require contractor license bonds, confirm via the licensing board or the surety.
- For larger jobs (e.g., over $50k), consider a Performance & Payment Bond. This adds cost (1–3% of contract) but protects against non-completion and unpaid subs.
- Permits: The contractor should pull permits under their license. Ask for the permit number and verify with the building department.
4) Cross-verify all details
- Names, addresses, and license numbers must match across:
- Proposal/contract
- License record
- COI and endorsements
- Permit application
- Keep copies in a single folder (digital or physical). Date-stamp everything.
Practical Examples
- Example A: A roofer offers a deal if you pull the permit as “owner-builder.” Decline. A licensed roofer should pull the roofing permit under their license; otherwise, you assume liability.
- Example B: A handyman doing a $700 drywall patch may not need a state license in some areas, but you can still request general liability coverage and a simple email COI from the agent.
Time and Cost
- Time: 30–90 minutes to check licenses and call an insurance agent. COIs often arrive same day; endorsements can take 24–72 hours.
- Cost: Verification is typically free. Additional insured endorsements are often free to $100. Performance bonds cost 1–3% of contract value.
Safety Considerations
- On-site injuries can become your problem if there’s no workers’ comp. Never let anyone start until coverage is confirmed.
- Use a clear chain of communication—documents direct from insurers/sureties reduce fraud risk.
Tips for Best Results
- Ask for updated documents if the project crosses renewal dates.
- Require the contractor to notify you of cancellations or material changes (10–30 days). Some insurers can add this.
- For condos/HOAs, follow association minimums (often higher than standard limits).
- Include insurance requirements in the contract with the exact limits and endorsements.
- Pay by milestone and get conditional/unconditional lien releases from subs and suppliers.
Common Mistakes to Avoid
- Accepting a photocopied COI handed to you. Always have it sent from the agent.
- Mismatched business names (DBA vs. LLC) across documents.
- Letting a contractor start before permits are issued.
- Ignoring workers’ comp because the “crew are 1099s.” Injuries can still hit you.
- Assuming a large social media presence equals compliance.
When to Call a Professional
- Large or complex projects ($50k+): consult a construction attorney to tailor insurance/indemnity language.
- Unsure about endorsements: ask an insurance broker to review the COI and forms.
- Disciplinary history or expired licenses: consider walking away or seek legal advice before proceeding.
By following these steps and requiring documents directly from issuing sources, you’ll protect your home, your budget, and your peace of mind—before a single tool hits the jobsite.