Hiring a Contractor? Not all are licensed, experienced or insured equally.
So you're looking to hire a contractor? How exciting!
We can just imagine the thrill you are feeling as you prepare to have your project built but before you get caught up in the romance of it all - there are a few things you should be looking for in the professionals(s) you hire.
You might be surprised to hear this but the cost of your project should be the least of your worries - for the moment.
What do you mean the cost should be the least of my worries?
Yes, we understand everyone has a budget and budgets are important. However, if you don't hire the right person the first time-you are going to pay to correct the work, once, twice, maybe even three times! Those few dollars you saved by going with the "cheapest guy" will be absolutely meaningless when the work has to be corrected. Ask around and we're sure your friends/family have these very stories to share.
So what is number one on the list when vetting a contractor for your project?
We're not just talking about whether or not they have a regular business license (which we hope they do). What we are referring to is their contractor licensing status. Are you aware that there are different license classifications AND not all licenses are created or earned, equally.
Are you looking to add on?
Build a new home?
Remodel a bathroom?
Build an accessory structure such as a garage?
Redo your kitchen?
Have replacement windows installed?
Depending the scope of your project, it is priority number one to ensure you are hiring the right person for the right job. Of course we hope you will consider Rave in the process but whether you do or don't, we want to make sure you are armed with the right information now -rather than later.
So what are the 3 licensing classifications for contractors in Virginia?
Class A, Class B and Class C
These classes are defined by the Code of Virginia as the following:
"Class A contractors" perform or manage construction, removal, repair, or improvements
when (i) the total value referred to in a single contract or project is $120,000 or more, or (ii)
the total value of all such construction, removal, repair, or improvements undertaken by
such person within any 12-month period is $750,000 or more.
"Class B contractors" perform or manage construction, removal, repair, or improvements
when (i) the total value referred to in a single contract or project is $10,000 or more, but
less than $120,000, or (ii) the total value of all such construction, removal, repair or
improvements undertaken by such person within any 12-month period is $150,000 or more,
but less than $750,000.
"Class C contractors" perform or manage construction, removal, repair, or improvements
when (i) the total value referred to in a single contract or project is over $1,000 but less
than $10,000, or (ii) the total value of all such construction, removal, repair, or
improvements undertaken by such person within any 12-month period is less than
Changes were implemented a few years ago with newly licensed Class A Contractors. If you come across a newer Class A contractor license you will also note the designation of "CBC" (Commercial Building Contractor) or "RBC" (Residential Building Contractor) behind their Class A title. Sometimes a Class A Contractor will have both. We are happy to share Rave has both designations.
In order to obtain a license, the Commonwealth of Virginia has additional requirements depending upon the licensing type. For example, Class A and Class B contractors must take a written exam pertaining to codes, business administration and ethics, soil sediment & erosion matters etc and must receive a passing score of at least 75%. A Class A Contractor must also show proof that they hold a minimum of $45,000 net worth in assets. A Class B Contractor must show a minimum of $15,000. Class C licenses require no test taking or proof of any assets. This does not mean there are not knowledgeable, skilled and ethical Class C Contractors out there. There are! Rave started out as a Class C license holder many years ago.
More information about the various licensing classifications can be found at the Virginia Department of Occupational Regulations website. You may also check to see if your prospective contractor is indeed licensed (you can search by business name or license number if you have it).
Great! Your contractor is touting many years in the business; longevity is important but this doesn't necessarily mean the hands performing the work match the claimed experience of the business. Did you know a construction company can claim to be a Class A Contractor by having a Class A Contractor as a "designated employee" within their company? What this means is that the person performing the work may not necessarily be - that designated employee. And the person "selling" their services to you, may not be the designated employee either.
It would behoove you to ask questions during your preliminary meeting.
Who will be performing the work and what is their experience level?
Who will supervise the work and how frequently will they be on site to inspect it?
Do they have a portfolio or website where you can view their projects?
Do they have a list of client references?
Can you visit any of their past projects or projects currently under construction? The latter
request is a tall order to fill so don't be surprised if the contractor is reluctant to allow you to
visit a job that is currently under construction. Doing so could create a potential liability for
them and may not be safe for you. Their answer will likely depend on the type of job you would
like to visit.
When talking to prospective contractors, you will also want to consider what their project experience has been? Is your project new construction or an addition or renovation? Or a combination? Yes it matters. New construction vs. renovations are totally different beasts unless you are okay with your addition/renovation possibly sticking out like a sore thumb. You should keep this in mind when hiring your design professional/architect as well. It takes a highly-skilled team to be knowledgeable about likely/potential existing conditions and tying in new work. Even those of us who are experienced miss things from time to time. (Unfortunately X-ray vision isn't available yet.) While aesthetics are certainly important - structural integrity is imperative.
If your project involves electrical, plumbing, heating and air work, etc. then it is typically a given that there will be subs working on your job. There are many Class A Contractors who do not perform any of the work themselves (other than supervising the job). This means that every portion of your project is built by another company from the ground up. This is not to say that particular type of Class A Contractor is not knowledgeable or incapable of providing a quality product but this will make a difference in the cost of the work as most contractors add a mark up subcontractor work. Typically 15-20%. (By the way, Rave does not mark up subcontractor services. We will save those details for another post. Stay tuned.)
Last but not least....
Is your potential contractor insured? Are their subs involved and are they insured? You have the right to ask for a copy of their COI (Certificate of Insurance). If they are not insured then you are running a very big risk if something goes wrong. Accidents happen. There are different types of insurance your contractor is legally required to carry:
A. General Liability
The extent of general liability coverage varies however the most common coverage extents are
$500,000, $! million and $2 million.
The dynamics have changed tremendously for those in the construction business over the past
few years. For example, if a general contractor has 3 or more employees OR the contractor pays
subcontractors to perform work and the sub has employees - then those subs and the subs'
employees are considered employees of the lead contractor. Did you follow that? As a result of
this newer legislation, that means the lead contractor must have a worker's comp policy (even if
the sub has their own policy). Frustrating and costly by the way but a legal requirement
C. Builder's Risk
A Builder's Risk policy is a type of insurance that covers your property during construction. (It
may also cover materials on site and the contractor's equipment). For a more detailed
explanation, click here. If you have a mortgage on your home, your lender will probably require
you to purchase a Builder's Risk Policy. This may be as simply as calling whoever you have
your regular homeowner's policy with and adding on the Builder's Risk while your work is being
If you don't have a mortgage, you may want to consider purchasing a Builder's Risk
Policy anyway. Your contractor may require you purchase one and if so, this will likely be
language included in your contract.
In addition to ensuring you hire the contractor best suited for your project, all of these factors will play a role in the pricing of your work. If you're reviewing bids for your job and you notice a gap in pricing from on contractor's estimate to the next- it could very well be a reflection of their experience and overhead expenses (licensing, insurance, etc).
We understand this is a lot of information to digest. Hopefully your excitement to embark upon the project of your dreams has not been squelched by the time you are finished reading this but we can't stress the importance of knowing about these things before you sign the dotted line. If you are a DIY type of homeowner and wish to be your own general contractor, Rave offers Project Management services that can help guide you from start to finish. A service you may want to consider particularly if you are tackling a bigger job.