top of page

Advantages Of Hiring a Licensed Contractor Vs. Unlicensed Contractor

Licensed contractors rely on their skills and reputation to keep their business; hence they are motivated to perform excellent and quality work while following the state laws.

If you have planned a home improvement project, you might need to hire some outside help. While you may feel comfortable taking up some smaller tasks yourself, perhaps with prior knowledge or simply using the abundance of YouTube DIY tutorials, other jobs are just beyond your comfort zone or skillset.

During these instances, it is time to bring on a contractor to handle the work for you. And maybe you are unaware, but there are licenses at play when it comes to all construction projects. You will have the choice to hire a licensed or unlicensed contractor for your project, whereby each of them will come with their advantages and disadvantages.

Thus, how do you choose? This post will brief you on the advantages and disadvantages of hiring a licensed and unlicensed contractor for your next home renovation or remodel project. Read on.

The price. The first question in every home owner's mind when considering hiring someone for a renovation project is, "how much will it cost?".

Unlicensed contractors give lower quotes for the job, making them an enticing choice. The reason is that they don't have to pay licensing fees, they don't have to purchase liability or worker's compensation insurance, and most of all, they don't have to obtain a bond to protect their work, unlike a licensed contractor.

The unlicensed contractor can offer their services at a lower rate without all these expenses, but it puts the consumer at risk. Guess who will be held liable if an employee or a third party is injured on your work site? That's right-it's you!

While it may be cheaper to hire an unlicensed contractor, you may want to rethink it when you consider the potentially disastrous financial consequences should anything go wrong and you are held accountable.

Liability and worker's compensation. All licensed contractors have two types of insurance: worker's compensation and liability. Unlicensed contractors do not because they are simply unlicensed. But how is this helpful?

The liability insurance protects you in case your contractor causes damage to your home during a renovation. For example, suppose your contractor wrongly installs the kitchen sink and causes water damage to your home. In that case, their contractor's liability will cover you by paying the cost of repairs and damages. Since an unlicensed contractor does not possess liability insurance in the same scenario, you would be the one to pay out of your pocket to fix the issue.

The worker's compensation insurance protects you if someone gets hurt on the job. If there is no worker's compensation, you would be held responsible for the injury.

Fees and fines. You may think that you are dodging fees by hiring an unlicensed contractor. The reality is that penalties for unlicensed contractors are not worth the money you saved by hiring them. Most homeowners do not realize how liable they are if an unlicensed contractor makes a mistake. Imagine you are renovating your bathroom, and your unlicensed contractor somehow damages the sewer line.

Not only will you receive fines for renovating without a permit, but you, as the owner of the house, will be accountable for the cost. On the other hand, if a licensed contractor makes the same mistake, it can still be costly, but the entire blame will ultimately fall upon them. This is because they have the required permits and a reputation for following the state laws.

"Hiring a licensed contractor should give you more protection. It means you are hiring someone who is educated in the task that you want to have done, and experienced in what the job is." Hicks says.

A licensed contractor understands all the compliances. Licensed contractors are fully trained to understand and meet all the legal requirements set by the federal government and the city council. They also plan regular inspections to ensure your home meets all the regulatory requirements. This is critical to the safety of your home and very crucial to the valuations of your property.

An unlicensed contractor does not have all of these, which may bring you unnecessary trouble that may pop up if such aspects are left unchecked.

A reimbursement fund. AZ ROC offers a Contractor Recovery Fund that reimburses the client for any damages caused by that licensed contractor and allows the contractor to correct the issue before the ROC steps in. If need be, the ROC will provide a replacement contractor to remedy the situation at the expense of the original contractor.

The original contractor will then have their license suspended until all expenses are paid with interest. Thus, a licensed contractor will have a personal and professional interest in doing things right the first time to avoid the embarrassment, expense, and headache of getting the ROC involved.

Something worth noting

The above claims also reflect on our permanent record, which is available to the public through a simple contractor search on the ROC website. Customers must hire a licensed contractor and research who they are considering hiring. Having a license doesn't always mean they do ethical business.

To search for a contractor, go to "", click "Find a Contractor", then enter the company's name, contractor's name, or ROC# into the search bar. When the results come up, click on the "More Info" link at the far right of the page to see the contractor's history and status with the ROC. For example, take a look at this, "".


Working with the right contractor helps you. And as you can see, when it comes to choosing between a licensed vs. unlicensed contractor, there is a clear winner. It may be a little more costly, but it's worth it. You are paying for superior artistry, and you are also paying for peace of mind. At Five40 Remodeling, AZ, we are a licensed, bonded, insured general contractor who offers excellent renovation and consultation services. Contact us today to receive a free quote, and let's get started on your next renovation.

97 views0 comments


bottom of page