Better Informed Housing

Summary

This video provides essential advice for homeowners looking to hire contractors for home improvement projects. It emphasizes the importance of verifying credentials, including contractor licenses and insurance, to avoid potential risks. Viewers are encouraged to perform thorough due diligence by checking references and online reviews. The video also highlights the financial and legal protections homeowners should secure, such as workman's comp insurance for subcontractors, to avoid liability. Ultimately, it stresses the importance of working smart, safeguarding investments, and ensuring a contractor’s business is reputable for long-term success.

Takeaways

• 😀 Contractors may not always provide all the critical details about their process, leaving you to learn the hard way.
• 😀 It's crucial to understand the behind-the-scenes details of home projects that are often overlooked in introductory materials.
• 😀 Spending money on securing your home improvement projects (e.g., through insurance and permits) is a smart investment that reduces future stress and liability.
• 😀 Focus on working smart rather than hard—being well-prepared can save you from dealing with unforeseen problems later on.
• 😀 Many contractors are independent operators, and 50% of them go out of business within a year, with 85% failing in five years.
• 😀 Low bids from contractors can be tempting, but sometimes they may cut corners by not obtaining the proper permits or insurance, exposing you to risks.
• 😀 Always check a contractor's license and ensure they have workman's comp insurance before hiring them for your project.
• 😀 Be aware that if subcontractors working for your contractor aren’t insured or licensed, you could be held liable if an accident occurs on your property.
• 😀 Do thorough research before hiring a contractor—ask for referrals, check online reviews, and verify their past work to ensure they meet your expectations.
• 😀 Protect your home and its value by doing your due diligence when hiring contractors and ensuring that everything is done legally and safely.

Q & A

What is the importance of due diligence when hiring contractors?

Due diligence is crucial when hiring contractors to ensure you choose trustworthy and reliable professionals. It helps avoid common pitfalls, such as unfinished projects, bankruptcy issues, and potential legal liabilities. Asking for proof of proper licensing and insurance, checking references, and verifying qualifications are all part of this process.

How can homeowners protect themselves from contractor liability?

Homeowners can protect themselves by ensuring that contractors and their subcontractors are properly licensed, bonded, and insured, especially for work that involves risk, like roofing. It's important to ask for proof of workman's compensation insurance and check the contractor’s license to avoid being held liable for accidents or injuries on their property.

What are the risks associated with hiring unlicensed contractors?

Hiring unlicensed contractors can expose homeowners to several risks, including subpar work, failure to comply with local building codes, and potential liability for accidents. Additionally, unlicensed contractors may not carry the required insurance or workman's comp, leaving the homeowner vulnerable in case of an injury or damage.

What should homeowners ask for when interviewing a contractor?

Homeowners should ask for the contractor's license, proof of workman's compensation insurance, and details about any subcontractors they plan to use. Additionally, it's important to review past projects, request references, and ensure that the contractor has a solid reputation in the community.

Why is it important to check a contractor's previous work?

Checking a contractor’s previous work gives homeowners a clear understanding of the quality and reliability of the contractor’s services. It helps ensure that the contractor can handle the type of project being undertaken and provides insight into their work ethic and professionalism.

What are some common reasons contractors go out of business?

Many contractors go out of business due to poor financial management, lack of proper licenses, and failure to maintain enough work or clients. Some contractors also take on too many projects at once or struggle with cash flow issues, leading them to declare bankruptcy and start over with a new business name.

How does hiring a licensed contractor affect the outcome of a project?

Hiring a licensed contractor ensures that the project will be completed in compliance with local codes and regulations, with appropriate safety measures in place. Licensed contractors are also more likely to have the experience, tools, and knowledge needed to complete the job correctly, reducing the risk of mistakes and delays.

What role does workman’s compensation play in protecting homeowners?

Workman’s compensation protects homeowners by ensuring that if a contractor or subcontractor gets injured while working on the property, the insurance will cover medical expenses and lost wages. Without this insurance, the homeowner could be held liable for the injury.

Why is it important to choose contractors who are properly bonded and insured?

Choosing contractors who are bonded and insured ensures that the homeowner is financially protected in case of accidents, poor workmanship, or failure to complete the job. Bonding protects against fraud or failure to meet contract terms, while insurance covers any damages or injuries that may occur during the project.

What are the consequences of not hiring a fully licensed contractor?

Not hiring a fully licensed contractor can lead to various issues, including legal troubles, unapproved or unsafe work, and a lack of recourse if the contractor fails to complete the job or causes damage. The homeowner might also face challenges when trying to sell the home, as unlicensed work may not be up to code or require costly repairs.