Understanding Contractor Licensing: What You Need to Know
Temp Services Editorial Team
Home Service Cost Experts
Contractor licensing protects homeowners from unqualified workers and provides recourse if something goes wrong. But licensing requirements vary dramatically by state and trade. Here's what you need to understand before hiring.
Why Licensing Matters
Licensed contractors have met minimum competency standards, carry required insurance, and are accountable to a licensing board. If they perform substandard work, you have recourse through the board. Unlicensed contractors may be cheaper, but you have no protection if they damage your property, get injured on your job, or simply do poor work.
License Types Explained
Most states distinguish between general contractors (who oversee entire projects) and specialty contractors (who focus on specific trades like electrical, plumbing, or HVAC). Some trades require licenses in all states, while others are unregulated. Check your state's licensing board website to understand what's required for your project.
Verifying a License
Never take a contractor's word that they're licensed. Look up their license number on your state's contractor licensing board website. Verify the license is current, the scope covers your project type, and there are no disciplinary actions. This takes five minutes and can save you thousands.
Insurance Requirements
Separate from licensing, contractors should carry liability insurance (covering damage to your property) and workers' compensation insurance (covering injuries to their workers). Without proper insurance, you could be liable if a worker is injured on your property. Ask for certificates of insurance and call the insurance company to verify coverage is current.
When Licensing Isn't Required
Many states don't require licensing for handyman work under a certain dollar threshold (often $500-$1,000). Landscaping, cleaning, and some repair work may be unregulated. For these services, focus on insurance, references, and reviews rather than licensing.
✓ Key Takeaways
- Licensing requirements vary by state and trade—check your state's requirements
- Always verify licenses through your state's official licensing board website
- Confirm contractors carry liability and workers' compensation insurance
- Be especially careful with electrical, plumbing, and HVAC work—these require licensing almost everywhere
- Unlicensed work may void your homeowner's insurance coverage