If your hairdresser, grocer, and local movie theater all legally require licensure for the safety and well-being of their customers…
…then you probably want your foundation repair contractor to be licensed, insured, and bonded as well.
Turns out, repairing foundation settlement and foundation heave is sophisticated work that requires specialized tools, training, and permits.
Are you licensed, insured, and bonded should be one of the top questions you ask any foundation repair specialist before the shovels hit dirt.
Why are Licensing, Insurance, and Bonds Important for Construction?
Licensing is imperative because you want to ensure your contractor actually knows what they’re doing. Insurance is important so that you, as the customer, don’t get sued if a contractor is hurt on the job. And, bonds are great for when you (the customer) need to sue/receive compensation for malpractice.
So, this article is going to cover:
The best way to explain the importance of licensing is to say it’s kind of like how you are required to have a driver’s license to legally operate a vehicle.
Your driver’s license validates that you’ve passed a written test, a driver’s test, that you understand the traffic laws, and have exhibited basic operational competency.
This license ensures you will not be penalized by the state for operating a vehicle and that’s about it.
*Note –this license is the state’s acknowledgment of competence, but a license does not cover liability (that’s why you have insurance).
It’s the same idea for general contracting licenses. So, you want to hire a general contractor with licensing because:
- The contractor’s competency is validated by the state
- A contractor’s license generally requires 5 years of experience per category
In short, validation of competency and experience goes a long way.
Here is a list of our licenses here at Dalinghaus Construction and our License Number:
Lic # 983851
- A – GENERAL ENGINEERING CONTRACTOR
- B – GENERAL BUILDING CONTRACTOR
- C-61 / D30 – PILE DRIVING/PRESSURE FOUNDATION JACKING
- C-8 – CONCRETE
It is imperative to make sure your foundation repair company is QUALIFIED for the job by double-checking their licenses through Contractors State License Board.
*Note – if the company you’re thinking about hiring does not have an A-General Engineering Contractors license and a C-61/D30 License, they are not qualified or legally permitted to install steel pier systems.
So, our licenses allow us to operate within a specific niche. For example, our C-8 Concrete license allows us to do Concrete R&R. Our C-61 / D30 Licenses allows us to do foundation repair with:
- Push Piers
- Helical Piers
- Helical Tiebacks
Fun Facts with Brian – An A General Engineering Contractor’s License is more difficult to get than a simple B General Engineering Contractor’s License.
An A requires more experience than a B, and an A allows you to do more types of general contracting jobs. This is why a lot of B General Contractors subcontract out their work.
In short, you should hire a licensed contractor because they are permitted by the state to do whatever work the license covers and they probably know what the hell they’re doing.
Back to our driving analogy. A driver’s license validates your competency, but your insurance policy is what protects you and others if you are unfortunate enough to be in a fender-bender.
Licensing covers credibility, insurance covers liability.
Insurance is important on two fronts.
Compensation insurance covers if any worker/employee is hurt on your property/the job site. You (the homeowner) can be held liable/sued if a worker is injured on your property and their company does not cover compensation insurance.
Unfair? Yes. Totally legal? You bet.
General Liability Insurance
General liability insurance covers you (the homeowner) in case anything goes awry during the pier install (like they hit a gas line and the home goes BOOM!) you won’t be held liable.
Note – Obviously, your house is not going to go boom. It’s just a joke. We actually call Dig Alert for every home that we work on to be extra safe and ensure we stay away from all underground utilities.
This is a win-win.
Now, if your foundation repair contractor doesn’t have compensation insurance and one of the workers gets hurt (maybe the concrete saw slips and a kid chops off a toe for example) you will have to pay for:
- The ER visit to have the toe reattached
- The ambulance that took him there
- And whatever else his lawyer can get him
Now, if your foundation repair contractor doesn’t have general liability insurance and your house goes “BOOM” – these guys can just skip off to the Bahamas and sip Mai Tais by the beach.
They don’t owe you a dime. It is very difficult to track these guys down and make them cough up any compensation.
So, make sure your foundation repair contractor has compensation insurance and liability insurance.
Fun Facts with Brian – If you play stupid games, you win stupid prizes.
Let’s stick to our driving analogy: a license is validation/permission, insurance is protection (for everyone involved), and bonds. Well, bonds are bonds.
Let’s say you get pulled over (no fault of your own). You’re licensed, insured, and you have all of the paperwork, but the policemen has it out for you because you didn’t offer to share your doughnuts.
Please Note – this is only a joke, we are very pro Blue here at Dalinghaus Construction.
He takes you downtown because you wouldn’t give up your jelly filled deliciousness.
You get written up for not sharing. You’re eligible for bail but you have no money (or, at least, not that kind of money because of your doughnut habit).
So, you make a phone call and get a bond.
That bond is now your collateral. Sure, you’re free to go, but you must return to go to court. If you don’t show up – back to jail you go and now you have to pay that bond back.
In the same way, when your foundation repair contractor purchases a bond (which they are required to by law for every specific license, usually with a minimum of 10 to 15 grand), this protects the homeowner.
Bonds are implemented almost exclusively for the client’s protection and for the contractor company’s accountability.
There are so many different kinds of bonds:
- James Bonds
But for construction, the two basic types of bonds we are going to cover are performance bonds and payment bonds.
Performance Bonds –
Performance bonds ensure that a general contractor will effectively execute the project until completion, meeting all previously outlined, contractual obligations.
In addition, performance bonds offer full compensation for liquidated damage provisions (for if a project isn’t completed in the outlined timeframe) and warranties.
In short, performance bonds are all about performance, delivery, promising to make good on everything in the initial contract.
Payment Bonds –
Performance bonds ensure that everyone who needs to be paid gets paid: subcontractors, suppliers, laborers, etc.
This is important because if your contracting company decides to subcontract out some work and decides not to pay, the homeowner is not liable (the subcontractors just go after the bond).
In short – bonds cover bail. But bonds also cover when the contractor bails.
Note – permits are their own thing. We are required to get different building permits depending on the state, county, and city ordinance. This is why sometimes it can take longer to start on your foundation repair project than we want. But, generally, permits are received anywhere between 4-12 weeks.
Again – Why only Hire Licensed, Insured, & Bonded Foundation Repair Contractors?
There is something to be said for experience, qualifications, and state recognition/validation of competency.
There is safety (financial and physical) in the strictures laid out by licenses, insurance, and bonds.
You would not, for example, go to an eighteen-year-old dentist running an emergency tooth clinic out of his garage littered with PBR cans, a busted computer chair dead center, and the kid zipping his Dad’s power drill.
An important thing to remember: sketch looks sketch. While this kid might only charge you 25 cents to have your tooth pulled, you’ll be shelling out a lot more to fix your jawbone in the ER later that day.
While unlicensed, uninsured, unbonded contractors are cheaper upfront, hiring them to work on a foundation repair project (or any repair project) could be the biggest mistake of your life.
If you reside in sunny Southern California or red-rocked Arizona and would like a licensed, insured, and bonded foundation repair contractor to give you a FREE foundation inspection, click the link below –