What does Licensed, Bonded and Insured mean?

A Florida girl’s advice on working with contractors.

Your house got destroyed by a hurricane; You want to remodel your kitchen or bathroom; You want to add a deck or patio to your backyard - What do all of these scenarios have in common? You have to hire a contractor.

I live in Panama City Beach, FL and flip homes for a living. It was with much pain (at times) and trial / error that I learned things about working with contractors that I didn’t know before I started flipping. I have a journalism degree and started with zero experience, hence the inevitable pitfalls I encountered; But maybe I can help you to avoid some of the mistakes that I made.

When you hire a contractor to do work on your home or property, you need to verify that they are Licensed, Bonded & Insured.
Let’s break this down…
Licensed means that the contractor must hold a professional license for their profession with the state of Florida.
Bonded means that the contractor has a surety bond (that they pay for), and that bond financially protects you if they fail to meet their obligations as your contractor.
Insured means that the contractor has general liability insurance and worker’s compensation, which protects you should they or a worker, etc. be hurt on your property or if your property is damaged during the project that they’re doing for you.

In Florida your contractor must be licensed, but being bonded and insured is not required, nor checked on by any governing body, which means it is up to you to make sure that your contractor is licensed, bonded and insured.

So, how do you make sure that your contractor is licensed, bonded and insured?
YOU REQUEST IT FROM THEM.

Before you ever start work with a contractor, you tell them to send you copies of their license information, a copy of their bond(s), and a proof of their business liability insurance and worker’s compensation. If someone can not provide these to you, then guess what - they don’t have them; and they’re a bad contractor.

When you get the license information for your contractor, you still need to do more digging.

First, verify that the contractor that you’re hiring has the appropriate license. In Florida, contractor licenses begin with 2 or 3 letters, and then some numbers (example: CGC 123456, which means Certified General Contractor # 123456). The 2 or 3 letters at the beginning tell you what type of contractor license they have (for example: CCC is roofing, CFC is plumbing, etc.). If you want to see a full list of the Florida contractor license prefixes, go to this website.

Now, once you’ve made sure that your contractor has the appropriate license type, you still need to look up their license with the state of Florida to make sure that it isn’t expired, or that they don’t have a bunch of complaints filed against them. To do this you have to go to the Florida DBPR (Florida Department of Business & Professional Regulation) website. You want to go to the license search, which is this website.

Put in the license number that they gave you into the search and see what comes up. Verify that under “Status/Expired” it says that the license is active. And also verify that it is THEIR license, meaning that their name appears there. Some bad contractors will give you someone else’s license number, so make sure that the license number that you are looking at belongs to them. Then click on their name to see their full license information. Once you do this, near the bottom, there is a link that says “View License Complaint”. If you click on that, it will show you any complaints on this license. If you see any complaints, I personally would not hire them - Even if it is only 1 complaint, because where there is 1, there is probably MANY MORE of people who never formally submitted a complaint.

So if their license is in good shape, and you get their bond, insurance and worker’s compensation information, (and read through all of it and everything looks good), then you are ready to hire the contractor.

If you remember at the beginning of this blog I told you that I hoped you could learn from my mistakes. Well, a real story is that early on I hired a contractor (let’s call him Bob) to do some work on a house remodel for me. He told me that he was a licensed electrician. I didn’t know any of this about checking on a contractor’s licensing, bond, or insurance - But Bob had worked for someone else I knew so I assumed everything was all good. Bob did a bunch of work for me - I paid him thousands of dollars. And then, I started “smelling blood in the water” with some of his work not being good (i.e. plugs weren’t working, a light switch in the hallway was turning on the bathroom light, my inspector told me that an RV outlet had been placed in the kitchen instead of a correct oven outlet, etc.). So I did some digging and guess what - Bob wasn’t a licensed electrician. So obviously I fired him, and then spent several more thousand dollars with a licensed electrician correcting what Bob had done and finishing the project.

The moral of this story, and the point of me writing this blog, is to tell you there are a lot of non-licensed, bad contractors out there who lie and will take advantage of people who do not know how to work with contractors.

Do your due diligence on verifying licensing, bonding and insurance on a contractor before you ever hire them. And hopefully you can save yourself from working with a bad contractor, like I did.

Good luck! :)