Do I Need To Hire A Licensed Contractor

Since I’m in the construction business I’m often asked about the importance of licensing.  Friends read articles that say the only way to protect oneself is to use a licensed contractor.  But the painter or handyman that’s been recommended isn’t licensed, is it safe to hire him?

Unfortunately, the answer isn’t always an easy one.

There are two different types of licenses in the jurisdictions in which I work.

Professional Licenses: Professional licenses provide assurance that a licensed individual has passed knowledge-based exams and has worked a certain number of years under a licensed professional.  Most jurisdictions require that electrical and plumbing work be performed by a licensed plumber or electrician.  A registered engineer or licensed architect, in addition to passing exams and having professional work experience must also finish certain degree programs.

Since I am not a licensed architect, I always use a registered structural engineer to approve certain types of structural changes.  Licensing says nothing about the quality of one’s designs or ability to work with and understand the needs of clients.  I am not comfortable designing a house from scratch, I would hire an architect to work with me on this.  However, because I’ve remodeled my own houses and am responsible for the construction aspects or remodeling for others, I’m in some ways better prepared than an architect to design and manage a remodeling design/build company.

I will also admit that I don’t always use licensed electricians and plumbers.  I always use a licensed professional for rough-in plumbing and for upgrades to electrical service.  In addition, I always get a permit which means an inspector will review the work to ensure it meets code.  But I don’t hesitate to use a handyman or other experienced contractor to change electrical or plumbing fixtures.  In fact, for remodeling my own homes, I’ve passed an electrical exam for homeowners and done my own wiring of lighting and outlets.  An inspector will inspect my work and this is comfortable for me.  Someone less familiar with construction might only be comfortable using a licensed professional for these tasks also.

Business Licenses: When a jurisdiction licenses a home improvement contractor, this is usually a business license and not a professional license.  The most basic protection that this type of license offers homeowners is the requirement for a certain level of general liability insurance – that level varies by jurisdiction.  In Maryland and the District of Columbia the amounts are $50,000 in property damage.  Both jurisdictions require that a company carry workers compensation insurance in case of worker injury.  In Maryland the license also requires a certain number of years of experience and passing an exam (which is testing knowledge of the laws and requirements not construction knowledge).  The District does not require this but does require copies of preprinted standard contracts.

So this home improvement business license basically assures the homeowner that the owner of the company has a basic level of business knowledge and a basic level of insurance.  But I carry far more insurance than is required for licensing and carry professional liability insurance as well as general and property liability insurance.

Importantly, Maryland also has a Guaranty Fund that can resolve claims made by homeowners should a licensed contractor fail to perform against a contract.

Conclusions: But licensing says nothing about the ease of working with a tradesman or how conscientious they are or about the neatness of their work.  A painting company large enough to go through the licensing process may also cost more and have an owner that only checks on work periodically instead of being on the job site working alongside his crew most of the day.  My favorite painter is not licensed.  But his work and that of his crew is the best I’ve seen.  Equally important to me and my clients, he is always on time, is neat, is easy to work with, has real pride in his work and has demonstrated that he can solve problems.

A decision about who to hire is much more complex than determining who is licensed.  Home improvement is like most everything else we do where we need to weigh risks and benefits in making a decision.  Just remember that a professional license does assure that a contractor has a certain level of training and knowledge (but the tested knowledge is a very small segment of the knowledge-based required for executing a complex remodel).  A business license assures a certain level of business knowledge and insurance.  Neither license says anything about whether that contractor is right for your job and for working with you.  In a previous article (link), I’ve offered guidance about what to ask references in hiring a contractor to help answer the questions about whether the contractor has the experience based required for your job and whether he’s a good match for you.  The questions are as relevant whether the contractor is a general contractor or a painter.

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