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Health & Fitness

Can We Really Trust Contractors? 8 Things You Should Know

Looking to hire a contractor to rebuild your home after Superstorm Sandy? Discover what you need to look out for when hiring a contractor.

As the funds continue to flow in from the National Flood Insurance Program (NFIP) and the lending institutions, the job of rebuilding from Superstorm Sandy continues here at the Jersey Shore.

Many of the local contractors that we insure are happy to report that they are backed up with work for the next six months. A very nice position to be in for a rather bumpy economy!

The Kinds of Contractors You Want to Deal With

Our contracting clients have these qualities, and you should look for them as well:

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  • Properly Insured (they carry general liability insurance as well as workers compensation coverage)
  • Practice Solid Risk Management
  • Licensed by the state of New Jersey
  • Have a Portfolio of Completed Jobs
  • Give Local References

Unfortunately, not all contractors are like this, and that's why you have to be very careful in this marketplace.

#1 - Get an Insurance Certificate

One of my customers had his summer home seriously damaged by Superstorm Sandy and the township condemned the building. He wants to build a new home on pilings, and was referred to a contractor nearby. He was in the process of obtaining a quote, and we suggested that he ask the "contractor" for a copy of their insurance certificate.

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He had none.

This is one of the biggest red flags to look out for when you are in the process of hiring a contractor. 

If the contractor does provide you with a valid certificate of insurance; it should show that general liability insurance and workers compensation coverage are currently in-force.

But don't stop there.

You should also call the company or agent listed on the certificate and verify that insurance for the contractor is actually in force. Some phonies will take out insurance coverage, obtain a declaration page or certificate of insurance, and then cancel the coverage.

#2 - All Contractors should be Licensed with the State of New Jersey

Any contractor you choose should have a State of NJ Contractor's License. In the example earlier, my customer found that the contractor he was dealing with never filed for a contractor's license with the state of New Jersey.

Unfortunately, you have to ask these questions and do your homework to make sure you are dealing with a reputable contractor. You can find out if your contractor is properly licensed in NJ here.

#3 - Beware the 'Deposit-and-Run' Scenario

Many contracting firms pop up after a storm and then disappear with your money (leaving an unfinished job, or worse yet, one with poor workmanship).

I am sure my customer was being set up for this 'deposit-and-run' scam when the contractor was unable to provide proof of insurance and had no NJ contractors license.

This leads to the next item...

#4 - Full Payment Up-Front is a Bad Sign

While you should be on the lookout for a contractor without insurance or a license, you should also be very wary of a contractor who is requesting full payment up-front before any work is done.

This is a sure sign that they are looking to run off with your money (see #3 above).

#5 - Ask for Local References

Practice due diligence by asking for references of work done in your area and, if possible, ride by the job they have done.

The more information you can gather to prove that you are dealing with a reputable contractor, the better. If they are worth their salt, they should be happy and willing to provide you with local references.

#6 - Watch for Out of State Vehicles

If you notice that the contractor you are dealing with drives a vehicle that is registered out of state, it is another sign that something is amiss.

You may be dealing with someone who is looking to collect some fast-cash from an unsuspecting victim of a storm like Hurricane Sandy.

#7 - Do Your Research

In addition to making sure the insurance and license checks out, you should also take a look on Angie's List, Yelp, the Better Business Bureau, and other online sites to see what you can find.

Hopefully, you will discover positive reviews that leave you feeling confident in your choice of contractor. If not, it might be time to look for someone else to work with.

#8 - Poor Workmanship is NOT Covered by Your Homeowners Policy

It is important to do the work to make sure you hire a reputable contractor because you don't want them to run off with your money, but more importantly, your home insurance policy does NOT cover poor workmanship by the contractor you hired.

If you find yourself in a situation where your contractor left with your money but didn't finish the job, or finished the job poorly, your only option is to start a legal action against the person who did the work.

In essence, good luck!

So please do your due diligence and feel free to contact our office at 877-329-3261 for help in investigating a potential contractor to do your work.

If you are a contractor and are looking for insurance, you can request a free quote here.

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