8 Questions to Ask Contractors Before Hiring One

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Hiring a contractor to waterproof your home's leaky basement, add that dream master bedroom, or renovate your kitchen is a big decision. These projects can cost thousands of dollars. You might have even tapped your home's equity in the form of a home-equity loan or line of credit to fund the renovations.

You want to be certain that you're hiring the right people for the job. And you can do that by interviewing several contractors and asking the right questions.

1. Do you have a contracting license?

Contractors require different licenses depending on the state or county in which they do business. You want to make sure that whatever contractor you hire has the proper licenses to work on your project. Otherwise, if local government officials discover that you are working with an unlicensed contractor, they could shut down your project, leaving you with a half-finished bathroom remodel or kitchen renovation.

Licensing requirements vary widely by state, so make sure you do your research before hiring. For instance, in Florida, contractors can hold one of two license types: certified and registered. A certified contractor can work anywhere in the state, while a registered one can only work in a specific community.

In Iowa, contractors who earn more than $2,000 for the year must be licensed with the Iowa Division of Labor, while in Indiana, the state only licenses plumbers. All other contractors are licensed at the local level, having to earn licenses from the individual municipalities in which they work.

Because states and individual counties and municipalities vary so widely in licensing requirements, it's best to call your local government before hiring anyone.

2. What kind of insurance do you have?

Any contractor you hire should have three types of insurance: personal liability, workers' compensation, and property damage. And don't just ask contractors if they have these policies. Ask to see the actual certificates of insurance.

If your contractor doesn't have these forms of insurance, you could end up paying big for any injuries or property damage that occurs during your home-improvement project.

3. How long have you been in business?

It's not always true that the most experienced contractors are the best. It's equally untrue that contractors newer to the business will cause you grief. But in general, more experienced contractors know how to stick to schedules and budgets. They've also experienced the common problems that can come up on a construction site and are more likely to know how to resolve them. (See also: 9 Home Improvements You Should Always Negotiate)

4. Can I contact past customers?

Before hiring any contractor, it's important to speak with their previous customers. These past clients can tell you how well the contractors stuck to schedules, if the budget on their project steadily swelled, or how well they cleaned up after themselves on a job site. They can also tell you whether the work the contractors did was high quality and worth the cost.

If a contractor can't or won't provide you with references? Hire someone else.

5. Will you use subcontractors on this job?

Many contractors rely on subcontractors to complete a renovation project. Your general contractor, for instance, might hire an electrician or plumber to help finish your job.

There's nothing wrong with this. But you want to make sure the subcontractors are reliable and that they also carry the right amount of insurance. If they aren't reliable, they could slow down your project. And if they don't have enough insurance coverage, you could again be responsible for paying for damages or injuries on your job site.

6. Will I need a permit?

It varies by local municipality, but your construction job, even if it seems like a small one, might require a government permit. Even something as small as installing a backyard fence might require one. Ask your contractor about this. Contractors who work in your area should know whether a permit is necessary for your job and what steps you must take to qualify for one.

7. How long will my job last?

Anyone who has worked with contractors knows that construction schedules can, and usually do, change during a job. But you will want at least a rough estimate of how long your home-improvement project will take. (See also: 10 Home Renovations That Almost Pay for Themselves)

8. How will payments be handled?

Ideally, you'll want to pay for your construction project throughout the process, making payments after your contractor reaches certain milestones. This will give you more financial protection than if you pay upfront. And if contractors are falling behind schedule, they might be more inspired to catch up if they won't receive their money until after they hit a goal.

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