Q: We’re planning a remodeling project. What paperwork, such as proof of insurance or certifications, should I request?
Brent M., Chicago Heights, Illinois
A: Some say a job isn’t finished till the paperwork is done, but with remodeling, the job shouldn’t start without proper research and documentation. Your general contractor should provide proof of licensing, bonding and insurance before a project starts, but it’s better to have it in hand before you sign any contracts.
It’s important that contractors carry any licensing and/or certification required for the specific trade or skill they practice. In addition, your municipality or state may require more general licensing. It’s necessary for pulling any required permits, and a contractor may have to be bonded in order to be licensed.
A contractor can purchase a bond through a surety company. The bond serves as an agreement between you, the contractor and the issuing agent that contractor will complete the job according to the terms you both agreed on.
For your protection, it’s also important that the contractor carry two kinds of insurance: general liability and workers’ compensation. General liability covers damage to your home. Workers’ compensation pays anyone working on the job site who is injured on the job. General contractors can opt out of workers’ compensation for themselves, but must provide it if they have even one employee.
The amount of general liability insurance a contractor carries will vary, but some insurers suggest a minimum $1 million because a mistake on even a small job can have expensive consequences.
If any subcontractors will work your project — a plumber or electrician, for example — it’s smart to confirm they’re appropriately insured, licensed and bonded.
Most contractors will offer their proof of insurance as a normal business practice. If one you’re considering hasn’t, simply ask. If a contractor seems reluctant or acts as if your request is unusual, consider finding a new one.
Some insurance experts recommend homeowners take a further step of asking to be added as an additional Insured on the contractor’s policy. For little or no cost to you, this extends coverage to you and ensures you’ll know if the provider’s insurance is canceled.
To avoid unexpected fees or liens against your property, include a lien waiver or subcontractor lien waiver clause in the project contract. With a lien waiver, when the project is successfully completed, both parties sign off and state that the contract obligations have been met, including the general contractor making all necessary payments to materials suppliers, subcontractors or vendors. If the general contractor doesn’t agree to sign the subcontractor lien waiver, you can withhold payment until he or she proves they’ve paid their suppliers or subcontractors.
A subcontractor lien waiver is an important step for larger projects that involve working relationships with contractors, subcontractors, material providers, equipment lessors and any other party to the project.
Angie Hicks is founder of www.AngiesList.com. Send questions to firstname.lastname@example.org.