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Last updated: 2026-05-24 · By Pebble Finds Editorial (Editorial)
Key takeaways
- Verify license status with your state or local licensing authority before you sign.
- Confirm liability and workers' compensation insurance with the insurer, not just on paper.
- Get at least three written estimates with the same project scope.
- Use a detailed written contract and avoid paying the full job upfront.
- Walk away from high-pressure sales, cash-only demands, and vague contracts.
Why contractor vetting matters
Home improvement projects can be expensive, and poor contractor choices can lead to unfinished work, property damage, or lost deposits. The Federal Trade Commission (FTC) regularly warns consumers about home repair and remodeling fraud.
Most problems are preventable with basic verification: license checks, insurance confirmation, written bids, and a clear contract. Legitimate contractors expect questions.
Step 1: Verify license and registration
Many states require contractors to hold an active license for certain work. Search your state licensing board database using the business name and license number the contractor provides.
Confirm the license class matches your project type and check for complaints or disciplinary actions. If licensing is not required in your area, ask your local building department what credentials apply.
Step 2: Confirm insurance coverage
Ask for a certificate of insurance showing general liability and workers' compensation coverage. Then call the insurer to confirm policies are active for your project dates.
Without proper insurance, you may face liability if someone is injured on your property or if damage occurs during the job. The FTC hiring contractor guide recommends treating insurance verification as non-negotiable.
Step 3: Check references and reputation
Request at least three recent references for similar work and call them. Ask about timeline, budget changes, communication, quality, and cleanup.
Search complaint records through your state attorney general or consumer protection office. Online reviews can help, but rely on patterns and how issues were handled, not a single rating.
Step 4: Compare written estimates
Get written estimates from multiple contractors using the same scope: materials, labor, timeline, permits, and exclusions. The FTC advises caution when one bid is far below others; that can signal cut corners or hidden charges later.
Do not choose on price alone. Clarity, communication, and contract terms matter as much as the bottom line.
Step 5: Review the contract and payment schedule
Get a signed written contract before work starts. It should list scope, materials, start and completion dates, total price, payment milestones, warranty terms, and change-order rules.
The FTC recommends avoiding large upfront payments. Many homeowners use a modest deposit plus progress payments, with a final holdback until work is complete and accepted. Never pay the full amount before completion.
Confirm who pulls required permits and schedules inspections. Unpermitted work can create safety and resale problems.
Red flags that should stop the hire
Be cautious if a contractor pressures you to sign immediately, demands cash or untraceable payment, refuses license or insurance verification, offers to skip permits, or asks for full payment upfront.
Door-to-door offers with “leftover materials” discounts are a common warning sign in FTC consumer alerts. Take time to compare options.