September 2017 - The Pitfalls of Using Unlicensed Contractors
Fall weather is perfect for home improvements – not too hot, not too cold, and the days are still long enough to get things done. But even devout “do-it-yourselfers” know some projects are better left to professionals. Do your homework before hiring to avoid these risks:
Home Improvement Fraud – This complaint was number two on the Top 10 Consumer Complaints list last year (down from the number one spot it occupied since 2010), according to the State’s Department of Law and Public Safety. Unlicensed contractors aren’t accountable to anyone whereas licensed contractors are regulated by the states in which they do business.
Most consumer fraud complaints relate to poor workmanship, missed deadlines and failure to start or complete projects. New Jersey’s Home Improvement Practices Act aims to protect consumers and requires contractors put certain things in writing, including:
- contractor’s name, address and registration number;
- project start and end dates;
- description and cost of work to be performed; and
- description of supplies and materials.
Additionally, New Jersey requires a general contractor have a minimum of $500,000 in contractor’s liability insurance per instance for registration.
Financial Liabilities – It may be tempting to go with lower-cost unlicensed contractors, but licensed general contractors carry the mandatory contractors’ liability insurance and its employees and subcontractors are covered by worker’s compensation insurance as required to cover damages or injuries. If you don’t have a licensed general contractor, that liability falls on you.
Recruiting a friend to help with your project isn’t the answer. Your friend’s insurance may cover medical expenses if he or she gets injured, but that insurance company can then seek reimbursement from you through a subrogation proceeding.
Most homeowner’s insurance policies aren’t enough to cover extensive medical expenses, lost wages, or expensive damage repairs. In fact, most policies contain exclusions for such claims.
Conclusion: Taking shortcuts on your home improvement project isn’t worth the risk; that being said, enjoy the results of your next home improvement project!