What is the most important decision a homeowner can make on any project they may consider buying for their home? Authorities agree that the critical success factor in any home improvement project is the selection of the contractor.
Perhaps like no other business, home improvement contracting has the reputation of generating more customer complaints than any other field. Sadly, for the industry as a whole, this reputation is well deserved. Due to a low barrier of entry into the industry and a high demand for its services, home improvement contracting is plagued with many individuals & companies that continue to underperform to homeowner’s expectations while suffering little or no drop off in business. Economists call this phenomenon “inelastic demand”. As one contractor lamented recently about his unscrupulous competition, “It’s impossible to get a bad reputation in this town!”
It has been said that you should evaluate your contractor as carefully as you would choose a doctor or lawyer. I disagree. I would say much more scrutiny is required for a contractor. As I recently explained to one of my clients who was a Doctor, despite the fact that all doctors have to attend years of schooling, pass tough medical exams, serve years of residency and then must obtain a given number of continuing education credits each year to maintain their license, we still see a wide range in the quality of the professionals in the medical field. Imagine how wide that range would be if there were no educational requirements and there was no test required to obtain a license! Amazingly, to cut hair in Virginia you must take a competency exam, but no such exam is required to be a licensed contractor! You can be a legally licensed contractor Virginia TODAY as long as you have $235.00 to pay for license.
So how is the homeowner to determine if a contractor is a competent professional? While there is no clear-cut or simple answer to that question, there are a certain number of indicators that will help you qualify certain contractors and reject others in order to protect yourself and get the best return on your home improvement dollar invested.
First Question: “What is the full name and address of the business?” Automatically reject any contractor without a permanent place of business. Studies have shown that most customer dissatisfaction involves low-bid undercapitalized contractors. If the contractor is not permanently established, how can you be confident he will complete the work or be in business if you need warranty service in the future? The courts are full of worthless judgments against insolvent contractors.
An easy step to determine if your contractor is well established is to visit the contractor’s place of business. The professional contractor will be proud & delighted to give you a tour of his facilities!
Second Question: “Does the Company carry the proper insurance?” The Contractor, at a minimum, should have both Liability and Worker’s Compensation insurance. Automatically reject any contractor without proper or adequate insurance.
In Virginia, if a contractor is working on your home without Worker’s Compensation insurance you may be held financially liable for injuries that they or their employees sustain. Here’s the catch: Worker’s Compensation insurance is not required for the owner of the company or his employees if he has 3 or less employees. So, the contractor may not be violating the law while putting you at grave risk. The proper method for ensuring your contractor is adequately insured is to request the contact information for his insurance carrier. Ask the insurance carrier if the contractor has Liability and Worker’s Compensation insurance and request a Certificate of Insurance. The insurance carrier will fax or mail you a copy of the contractor’s Certificate of Insurance with your name on the Certificate as the “Certificate Holder”. This obligates the carrier to notify you if there is any cancellation in the policy due to non-payment or other causes. This protects you against unscrupulous or under-capitalized contractors that pay for a policy just to get a copy of the Certificate of Insurance and then cancel the policy.
In future posts, we will continue with the remainder of these simple but effective qualifying questions and methods that wise homeowners can use to help ensure they make a successful home improvement investment.