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How To Tell If Your Contractor Is Legitimate



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By : Wes Hamilton    99 or more times read
Submitted 0000-00-00 00:00:00
This article outlines a few of the basic items that you, as a customer, must look for in a contractor before hiring them. These days,especially with the economy being what it is, you must carefully research all of your contractors. There are a lot of unemployed and, therefore, improperly licensed people trying to pass themselves off as qualified, legitimate businesses.

Almost every form of advertising from a contractor, whether it be simply their vehicle signage or in phone book advertising, you will repeatedly see the phrase "Licensed, Bonded and Insured". Do you as a consumer actually know what each of these words mean and how they can affect you? Well, for your protection you better!

Let me explain these items to you! I know these terms well - and pay dearly for them. I own a legitimate service business and meet all of the terms I am about to outline below. Much of my competition exploits these terms, or rather fraudulently use them. This particularly bothers me since I run a business and am actually Licensed, Bonded and Insured. These words come at a substantial cost to those of us who run legitimate businesses and actually meet the requirements to take good care of our customers.

This article is slanted towards plumbing , since I am in the plumbing business and fully understand plumbing contracting - but is relevant to all other forms of contracting.

FIRST- Being Licensed can mean many, many, things. So, if your plumber says that he is licensed what exactly does he mean? Does he mean that he has a (Drivers License) - HA :-)!! Does he mean that he has a state issued plumbing or general contracting license, a local business license, or all of the afore mentioned? Well, if he is legitimate he will certainly have a state issued master plumber 's license and/or master gas fitter license. He should also have a local business license and perhaps multiple business licenses for each municipality that his company services.

Your contractor should be able to produce these items for you upon request - if he actually has them. You can also call or go online your State Plumbing and Gas fitters Board and to your states general contracting board to check the status of your plumber without them ever knowing! Also, call your municipality (City / County) to check their business license status.

SECOND - Bonded - what does that mean? Well there are many types and forms of Bonds and Bonding. For, instance in my service area, which covers approximately 15 different municipalities, I am only required by two of those municipalities to actually have a bond on file with the jurisdiction (city / county). Here is the real "problem" - the bond required for the year is only for $ $10,000.00! If a customer had a problem and had to challenge my company or the city on a job that was messed up they could could only claim up to $10,000.00 of damages (the amount of the bond on file). That naturally will not cover much in damages.

Remember that I am not required by the rest of my service area to be bonded. If there were to be a problem then the customer (you) would have to hope that I am a decent human-being an honest businessman and will honor my warranty. If I do not choose to honor my warranty - then what will you do? Well, you will have to hire an attorney and sue me for damages! This is a long drawn out process and sometimes is not worth the trouble. Let us assume, though, that you do sue and win -- you may still get nothing. If your contractor is an INCORPORATION or an LLC then he could simply file bankruptcy and close the company. Having the status of an INCORPORATION or a LLC does afford us as business owners these types of protections.

Some people would say that me telling people all of this information would / could, potentially, amount to suicide for me and my business, as my business is referenced in the author information. But, I strongly feel that consumers should know how the contractors and businesses they deal with operate and the potential negative penalties of using a improperly qualified / licensed contractor. I, as a legitimate business owner, do not enjoy watching innocent customers being taken advantage of! You should only use good established companies with proven track records and be willing to pay just a bit more for their services! You will save in the long run.

THIRD - Insured - the proper type of insurance and the policy amount is very important . Sometimes the only thing that is insured is the vehicle and it is not even on a Commercial Policy. A lot of good that will do if there is a problem with the work, your house floods out or burns to the ground!

The proper insurance you should be looking for is called General Liability Insurance- preferably with a Worker's Compensation policy. The Worker's Compensation policy will protect (you the consumer) if say one of your contractor's employees hurts their selves on your property - in short they can't sue you, they will be covered under their employers policy!

General Liability Ins. should be a policy with a MINIMUM of at least $1 million dollars with an umbrella (excess coverage per incident) of at least the policy minimum( $1MILL in this case) or in most cases double the base policy coverage. Having this type insurance is very expensive and many contractors do not have it. They manage to skate by never being caught or even asked about it.

You as the consumer should only deal with contractors with the above mentioned qualifications. A contractor who meets these qualifications will probably take good care you - it is in their best interest to keep you happy. Thank you for taking time to read this article, hopefully it will be of help to someone!

Note: I have been told by others that this article is a bit "alarming" and that some people who have read it had a big lump in their throat after reading it! Good, this is how the article is to be taken! Do your research on your contractors, don't use "fly by night" contractors or employees of other companies that do side work. These unscrupulous "contractors" (as they call themselves) obviously do not have the money to fix the problems they create.
Author Resource:- The author is the owner of an established plumbing business. He writes articles on consumer information / protection , business in general and home improvement.
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