Wednesday, February 18, 2009

Taking the pain out of hiring a home improvement contractor

Spring time means home improvements and yard projects, which may mean hiring a contractor to help out. Deciding to hire a contractor can cause fear, anxiety and increase stress. Who can you trust to do a good job, stand behind their work and do it at a fair price? If you understand how to hire a contractor and do a little homework you will dramatically increase your odds for a positive outcome.

The process of hiring a contractor for a project varies on the type and scope of work as well, as the budget. With a deepening recession, homeowners will likely see more offers from individuals and companies they may not have heard of before as unemployed or laid off workers start entrepreneurial ventures with the hopes of making ends meet. Don’t rule out the newer contractors who may be qualified for your job, but there are other risks to consider. Taking the time to select a reputable and professional contractor may save you time, money and wasted emotional energy.

Three key points to consider when hiring a contractor:

  1. Use your gut instinct in determining if you like the personality, style and professionalism of the person or company that you are considering. Feeling like a good fit is the first criteria – but is not the only one. Dig deeper and go beyond your gut instinct before you enter a business relationship that has financial consequences. Be sure to interview at least two or three contractors and get several quotes. Be leery of claims from contractors that simply state they can do the same job for a lot less.
  2. Does the contractor carry the proper insurance including both general liability and Workers’ Compensation coverage? Business insurance is one way to help legitimize a company. Most importantly it provides essential protection for the homeowner from certain liabilities.
    - General liability coverage protects the homeowner should an accident occur and there is property damage or a personal injury. It also increases the chance of recovering any claims should a law suit be necessary from a project that fails to perform.
    - Workers’ Compensation coverage provides the employee of a company with coverage in the event of an injury while working. If a worker for the contractor is injured on the owner’s property and the contractor does not have Workers’ Comp coverage, the homeowner may be at an increased risk regardless if they are negligent in causing the accident or injury. An injured worker who does not have Workers’ Comp coverage through the contractor may have expenses that they seek to recover and the homeowner’s policy may not provide coverage leaving the homeowner exposed to the liability. Workers paid under the table or paid as “contractors” but are really considered employees by the IRS are not then covered by Workers’ Compensation coverage.
  3. Does the contractor put their quote or bid in writing? Verbal agreements are the root cause for many problems between contractors and homeowners. A written agreement, or contract, should detail the scope of service, timeframe for the job, agreed upon price and the terms. A fixed cost contract prevents escalating costs that are common in time and material bids. Change orders to the original agreement and warranties should also be in writing to minimize forgotten commitments.

In a depressed economy homeowners can’t afford to gamble unnecessarily. For a free list of tips on how to safely select a contractor and what questions to ask – email