Uninsured Vs Insured Contractors: A Guide

Uninsured Vs Insured Contractors: A Guide

Guest post: Rachel Porter

Homeowners looking for a contractor to help build their home often go for options to save on expenses. As such, they would rather hire unlicensed and uninsured contractors who offer their services at cheaper rates. Situations like this are the reason why some homeowners end up with homes that are easily damaged. 

However, hiring a good contractor is not just about sticking to your budget and ensuring that your home is well-built; it is also about choosing one that can guarantee you high-quality services, reliability, and safety. The ideal way to do this is to find a contractor with insurance coverage. Contractor insurance is a policy that protects contractors and their workers if they are injured, get sick, or figure in an accident while on the job. It also protects the homeowner from financial obligations when things go wrong on the job site.

A homeowner who chooses to go with an uninsured contractor will automatically become the project’s general contractor. This means the responsibility of ensuring that everything on the job site and the workers is well and good. If something goes wrong, it becomes the homeowner’s responsibility as well. 

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What is a Licensed and Insured Contractor?

A licensed contractor is professionally trained and exhibits significant competence levels. The local or state government issues the license after the contractor passes several tests, submits requirements, pays an application fee, and acquires the right insurance.

A licensed contractor is insured. An insured contractor is covered and protected from certain job-related risks and on-the-job accidents and injuries.


What is an Unlicensed and Uninsured Contractor?

An unlicensed contractor usually does not have the proper training and competence levels. An unlicensed contractor is typically not registered with any contractor organization. This kind of contractor does not follow state or government guidelines, so there is no guarantee that the job will follow industry standards.

An unlicensed contractor usually offers cheaper rates because he does not have to pay insurance premiums. For homeowners, the cheaper rates will eventually turn into thousands of dollars if an accident happens or when the uninsured contractor is injured while working onsite. 


Uninsured vs. Insured Contractors

Uninsured Contractors

Hiring an uninsured contractor exposes homeowners to risk. Here are some of them.

1. Uninsured contractors often deliver substandard workmanship. As mentioned above, unlicensed and uninsured contractors are not as adequately trained or competent as licensed and insured ones. As such, you won’t have the guarantee of getting high-quality work. 

Some uninsured contractors may even expose you to harmful and fraudulent activities. A good example of this would be using materials and equipment that are not up to industry standards, which can lead to more harm than good as you may have to deal with damages after only a couple of weeks.  

2. Using uninsured contractors will hold you liable for any damage that takes place in your home or accidents that happen to your contractor’s employees while onsite. Since the contractor is not insured, you will have to spend for accidents, injuries, and damages on the job. If the incident reaches the courts, you may even have to pay for the legal fees as well. 

3. In some cases, as a homeowner, you will act as the general contractor if you hire an uninsured contractor. You will be responsible for whatever happens on the job site and to your workers.

4. Hiring an uninsured contractor may cause legal issues if the contractor is injured while working on your property. Depending on the circumstances of the incident, the contractor may seek legal help, particularly for medical expenses and legal fees. 

5. An uninsured contractor may be limited to performing certain types of work, especially the high-risk ones. 

6. If a worker gets injured at the job site, your homeowners’ insurance policy may not cover the claim, so your provider may have to adjust your rate to accommodate the coverage needed.  

To sum it up, hiring an uninsured contractor means you are responsible for everything that happens when: 1) workers get injured, and 2) your property is damaged while the contractor’s work is ongoing.

Insured Contractors

1. You are assured of your contractor’s credibility.

Hiring an insured contractor gives you the guarantee that your contract is legitimate and the workers are trained and licensed. You are assured that your contractor is credible and can provide high-quality work. You know that an insured contractor values the work they do, so your investment is safe.

2. You are protected from risks like property damage.

Insured contractors often carry both worker’s compensation and liability insurance policies. They are covered when an accident happens on the job or your property is damaged while the project is ongoing. You won’t be held liable for the expenses. 

3. Your property is protected.

Insured contractors are licensed and have all the necessary permits. They also follow industry standards. You have the assurance that work on your property will be done with the utmost professionalism, legality, and quality. Your property will be protected from substandard work.

4. Your property investment is guaranteed to be cost-efficient.

When an unlicensed, uninsured contractor makes a mistake, you’ll have to spend on the repairs. If the mistake resulted in injuries, you’d shoulder the medical expenses. However, if you work with insured contractors, you won’t have to spend on these because your hired workers are covered by their policies. So, even if insured contractors have higher rates compared to uninsured ones, you end up saving more in the long run.


Hiring an insured contractor is essential, but it is also crucial to choose the right one. Look for a contractor that has been in the industry for several years, has had significant experience, and can provide the proper permits, licenses, and contracts. Don’t forget to ask for a certificate of insurance as well.


Rachel Porter is the content specialist for Custom Contractors Insurance, LLC, an Arizona roofing and contractors insurance company. When not writing, she enjoys reading and mountain biking with her friends.

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