Licensed vs Unlicensed: Why It's Important to Hire a Licensed Contractor

Demolition contractors, and contractors in general, are required to have a license in most states.

Having the proper local and state licensing acts as a basic indication that the contractor or company is qualified to handle the work and is doing so in compliance with local building regulations.

Contractor licensing requirements vary from state-to-state—and some state's leave licensing up to cities and counties entirely—so double check your state’s licensing requirements before hiring a contractor.

In this guide, we'll discus:

• Benefits of Hiring a Licensed Contractor
• Why You Shouldn't Hire an Unlicensed Contractor

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Benefits of Hiring a Licensed Contractor

There are a number of reasons why we recommend hiring a licensed and insured contractor, but they all have one thing in common: customer protection.

Hiring a licensed contractor protects you from many things, including:

• Being taken advantage of by contractors who aren't credible and just want to take your money and run
• Being held liable for property damage or personal injury on the work site
• Paying for work that isn't done up to code or with the proper permits
• Having to pay to fix shoddy work that wasn't done properly or safely
• Taking a hit to your property value

Learn more: The Difference Between a Contractor's Bond, License, and Insurance

Why You Shouldn't Hire an Unlicensed Contractor

It's in a property owner's best interest to check a contractor’s license to confirm they're reputable and worth hiring.

Hiring a contractor who isn't properly licensed may be cheaper upfront but it comes with a number of downsides...

Additional Costs & Liability

Unlicensed contractors often do not have the experience necessary to provide quality work and often don't pull the necessary permits. This causes problems down the line for the property owner, requiring them to often pay to have the work done again by a licensed contractor with the necessary permits.

Homeowners can also be at risk of being held legally liable for using an unlicensed contractor. In most states, if an unlicensed contractor or one of their employees is injured on your property, you may be liable for the costs associated, like legal fees, lost wages, and medical costs. And this could be true, even if the homeowner did not know the contractor was unlicensed.

Contractors who don't care about getting licensed and performing work legally often don't care about keeping the work site clean and safe either.

Lower Quality Work

Getting the necessary licensing is a sign that your contractor is legitimate and in business for the right reasons: with the intention of providing quality services to their customers for a fair price.

If a contractor isn't willing to become properly licensed, it's a sign they aren't willing to be held accountable for the quality of their work either. A contractor who doesn't hold themselves accountable—and isn't held accountable by local and state licensing boards—puts you at risk of receiving shoddy work at best, if they do any work at all.

Higher Longterm Costs

As previously mentioned, a contractor without insurance or the proper licensing is more likely to provide lower quality services that are not done properly or safely. This may be cheaper upfront but will cost you more in the long run.

An uninsured, unqualified contractor is more likely to make mistakes that have to be corrected later. You also would be left responsible for covering the cost of injuries or property damage if the contractor doesn't have the proper insurance.

Insured contractors typically cost more at the time of services, but they are usually cheaper longterm because they do the job properly and safely.

Greater Risk

Having work done by an unlicensed contractor without the proper permit can have negative consequences down the line when you want to sell your house, reducing its overall value.

Quality work done properly and legally by a contractor who is properly licensed, insured, and obtains the proper permits will produce a better return on investment rather than putting your greatest investment—your property—at risk.

Keep reading:

• What Does Contractor Insurance Cover?
• Avoid These 5 Red Flags When Hiring a Contractor
• 7 Keys to Successfully Hiring a Demolition Contractor

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