When you get bids for any home repair, remodeling, or construction project, it can be tempting to take the lowest number. After all, everyone likes a great deal. But when it comes to contractors, saving a few bucks to hire an unlicensed and uninsured contractor puts your finances, home, and entire way of life at risk.
B&C Comfort provides fireplace repair and installation and HVAC repair, and we are licensed, bonded, and insured. But the issue of licensure and insurance extends to any and all contractors such as painters, plumbers, appliance installers, remodelers, floor installers, kitchen tilers, and pretty much any other contractor you can imagine.
If you’re not sure why it’s very, very smart to pay a little extra for a licensed and insured contractor, keep reading and see some of the risks of hiring an unlicensed contractor.
And to be clear, we are not lawyers. For certainty about the legalities of anything related to workers comp, liability, and general contracting, consult an attorney.
Why Do People Hire Unlicensed Contractors?
Most people who hire unlicensed contractors don’t even realize they’re doing it.
Some are just asking a friend or neighbor to help them, perhaps because that person has experience or used to work in the field. This type of person doesn’t realize their friend or neighbor is technically a contractor in this scenario. And as such, that person is unlicensed.
Others hire real companies that aren’t licensed just to save money. Such companies simply don’t want to bother with the licensing process and the associated costs. They get around this by presenting themselves as being more legitimate than they are, and because their rates tend to be lower, some people will hire them.
Some law firms, such as this one, will tell you these situations so often end up causing major problems for the person hiring the unlicensed contractor, and they have seen it “over and over.” This property management firm tells one story of a court case showing how bad this situation can get for the person hiring the unlicensed and uninsured contractor.
The Core of the Issue – Who Is Responsible?
This entire discussion comes down to the simple question – who’s in charge?
Here’s how to say it in industry terms:
If you as a homeowner hire an unlicensed and uninsured contractor, YOU become the general contractor. And as a general contractor, you are financially responsible for everything that happens with your project.
It’s pretty much that simple. So, let’s look at some of the risks you are taking on as a general contractor for your project.
Risk #1 – On the Job Injuries
If you hire a friend or neighbor to help you with a job at your house, or even a family member, and they get injured while working, you can be held liable for any medical bills or lost wages due to their injuries.
Workers compensation insurance is meant to take care of this situation, but an unlicensed contractor is forbidden from obtaining workers compensation insurance. So your contractor isn’t licensed, you can guarantee they are also not insured with workers comp or general liability.
Risk #2 – Shoddy Workmanship You Have to Pay for
Imagine getting your bathroom remodeled with the help of a friend who once did their own bathroom, so you trust them enough to have experience. Well, your house is different from their house. And they don’t know all the codes and best practices for how to mitigate mold, prevent water damage, and all the specifications and best materials to use for piping, connections, all the rest.
If your house ends up with mold, mildew, leaks behind the walls forcing you to tear a new hole in the wall to fix them – you will have to pay for all those cost overruns, and you cannot sue your friend even if it’s entirely their fault.
Since they have no general liability insurance, you will be judged to have taken the risk, knowing what you were getting into. Furthermore, your own home insurance probably won’t pay for the costs either, because they will hold you responsible for using an unlicensed contractor.
The same holds true if the contractor abandons the job before finishing. This happens. If the contractor is licensed and insured, you can either demand another person come and finish it, or sue them to pay for you to hire someone else.
Risk #3 – Collateral Damage
Another reason you need a contractor to have general liability insurance is to cover all the remaining potential problems other than personal injury.
For example, what if during the project a neighbor’s house, yard, or vehicle gets damaged? If your contractor has no insurance, you will have to pay for the damage if the neighbor wants you to.
What if other parts of your home get damaged?
Suppose you hire an unlicensed HVAC installer instead of an insured specialist like B&C Comfort to put in your new heat pump or air conditioner.
What happens if they accidently sever an electrical line or damage the plumbing during the installation? Since they aren’t licensed or insured, they are not obligated to fix it or to pay your costs for fixing it. And if they skip out on you, there’s not much you’ll be able to do about it.
With an insured and licensed installer, you won’t be on the hook for unexpected damages.
Risk #4 – Car-Related Accidents or Injuries
A third type of insurance that you want to see your contractor have in some cases is auto liability insurance.
If a contractor gets injured while loading or unloading equipment from their vehicle, or their vehicle damages your property somehow, this usually falls under auto liability instead of general liability.
An unlicensed contractor will not have auto liability either, which means that once again, you’re on the hook for any costs related to such damage or injuries.
Risk #5 – Reduced Home Value
An unlicensed contractor will likely not get any permits from the city government for the work they’ll be doing. Most permits can only be given out to licensed contractors.
This matters because if something gets installed improperly, and the lack of permits shows up in a home inspection report while you’re preparing your house for sale, it will cut into the value of your home unless you choose to make the necessary repairs before selling. Either way, you’re losing money – for the repairs, or on the resale.
Risk #6 – Loss of Warranties
Finally, yet another way hiring an unlicensed contractor to save a few bucks can come back to bite you is with warranties.
Most products that come with warranties, such as appliances, flooring, solar panels, air conditioners, and fireplaces, stipulate in their warranty language that the product must be installed by a licensed and contractor.
That means, if something goes wrong with your installation or your product and you discover a problem a few months later, the company that manufactures the product will void the warranty if you used an unlicensed contractor.
Did You Mess Up and Hire an Unlicensed Contractor?
If you’re reading all this and feel like you’re out of luck, you might be.
Here’s a state of Washington government page explaining how to file a suit against contractors for various reasons and scenarios. But unfortunately, if the contractor isn’t licensed and insured, most of these options won’t be available to you.
That’s not to say there are no options, but you’ll probably need help from a lawyer if you’re going to hope for a positive outcome.
What About B&C Comfort?
As mentioned, we are licensed, bonded, and insured and can install and repair fireplaces and repair HVAC equipment, which includes heat pumps, air conditioners, and furnaces.
If you need repair or installation work in any of these areas and live in northern King County or Snohomish County (see the footer of our home page to confirm if your zip code is in our service area), we’d love to help!
