Licensed, bonded, insured: What it means to you

By July 7, 2015 March 29th, 2018 Company News

By John Fisher

Licensed, bonded, insured: What it means to you

Don’t be afraid to ask your contractor for credentials.

You have decided to build or remodel your home or business. This is a big step, both financially and emotionally. Choosing the right contractor to complete this project is also a big decision.

Hiring the wrong contractor can lead to cost overruns, delays, substandard work and sometimes even litigation over disputes regarding the timing, quality or cost of the project. While it’s tempting to choose a contractor based solely on an online portfolio of completed work or customer testimonials, don’t overlook the importance of making sure your contractor is properly licensed to perform the project as well as adequately bonded and insured.


Certain types of contractors may be required to hold a state or local license demonstrating that they meet minimum training or experience requirements. These types of contractors generally include electrical, HVAC, and plumbing and refrigeration contractors, but this may vary by state. In many states, and even individual municipalities, contractors must be bonded to be eligible to be licensed.

General contractors taking on jobs involving any usually licensed trades, as listed above, generally should be licensed themselves. Don’t be afraid to ask a contractor for their license number. Steer clear of contractors who lack licensing required in your state or locality. If your construction work is the result of an insurance claim, your agent may be able to advise you, or check with your attorney to resolve any licensing issues.

You can use a contractor’s license number to check with the state or municipality about any complaints filed against that contractor. Some states provide a website to check licensing for some trades. You also can check with your local Better Business Bureau for its rating of a particular contractor.

Hiring a licensed contractor does not guarantee all will go smoothly with your project. Even licensed contractors can run into problems, therefore it is important to check that your contractor is bonded and insured.


These terms are similar, but not the same. A bonded contractor has secured financial backing – sometimes called a performance bond or contract bond – from a bonding company or insurer that will provide funds to pay the consumer if the contractor doesn’t perform as required. Performance bonds protect property owners against problems not covered by the contractor’s insurance.

For example, if the contractor should fail to complete the project (because of bankruptcy, death or just walks away mid-project, etc.), a …read more

Cincinnati Insurance Company Blog: Cincinnati Insurance Company