Angie’s List Founder Angie Hicks today called on state lawmakers around
the country to enact uniform and understandable trade licensing laws that give
consumers an assurance that anyone holding a license is qualified to do the job
it covers.
She also asked lawmakers to
set aside a portion of licensing fees for consumer protection funds, as a few states
already do, so homeowners who are bilked by licensed contractors can recover
their lost investments. Hicks will be sending letters to governors across the
country outlining the need for better trade licensing laws. (See state by state graphic below)
“Most trade licensing is too
complicated and offers too little enforcement or protection,” Hicks said. “Homeowners
should be able to trust that if a governmental body has given a license to a
contractor, that the contractor is reliable and qualified. They should also
have access to some recompense if they rely on a licensed contractor who
doesn’t deliver, or worse yet, cheats them.”
Hicks’ call for better laws
around the country coincides with a strengthening of Angie’s List policies
about trade licensing. Angie’s List, (www.angieslist.com), the nation’s
leading provider of consumer ratings on local service companies, has helped
consumers find high quality contractors for the past 14 years. Traditionally,
the company has relied on companies to list their trade license status and
asked members to verify that status on their own.
“Licensing laws vary greatly
across the country and even among cities within the same state, which makes it
hard for contractors to keep track of what’s required and what isn’t. Consumers
don’t have a chance of figuring it out without help,” Hicks said. “Consumers are
still responsible for determining the license status of the contractors they
hire, and Angie’s List will be working to make it easier for them. But the key
to really accomplishing a better system will fall to lawmakers.”
While lawmakers may debate
how – or if – to address the issue, Angie’s List is now requiring companies on
the List to attest that they are in compliance with state and local laws. Like
the IRS, Angie’s List will audit contractors to verify they are following the
law. Those found to be out of compliance will have an opportunity to comply or
face actions from Angie’s List that will include alerting members to their true
status.
Hicks said it’s probably
unrealistic to expect all states to adopt the same uniform licensing law that
requires minimum training and qualifications, proper enforcement and consumer
protection. A state-by-state approach is likely more realistic. “Even if each
state has different trade licensing laws, having one direction per state to
follow would be better than the mish-mash we have now,” she said.
Most states issue licenses
for at least some contractors, including plumbers, electricians, heating and
cooling specialists, handymen, builders and remodelers. However, the licensing
requirements are anything but easy to follow. The complexity of the issue is
laid out in the September issue of the Angie’s List Magazine: http://magazine.angieslist.com/
- 15 states have state
licensing only
- 10 states have state
licensing and registration
- 9 states have state
licensing, as well as local licensing
- 4 states have state
licensing and local registration
- 2 states have state
licensing, as well as local licensing and local registration
- 4 states have state
licensing and registration, as well as local licensing
- 1 state has state
registration and local licensing
- 4 states (including Washington D.C.)
have local licensing only
Source: Angie’s List
research of continental U.S.
trade licensing laws
“A current trade license won’t guarantee that
your contractor will complete your job perfectly, but it will give you some
insight into how your contractor handles his or her business,” Hicks said. “In
communities where licensure is required, unlicensed contractors are breaking
the law. If he or she breaks this one, what others will they break? If the
contractor doesn’t know he or she needs a license to operate, what does that
say about how on top of things he or she is?”
In most states, a valid license indicates the holder carries insurance and
workers’ compensation, but you still need to be sure the contractor has
adequate and the right kind of insurance. In many cases, only licensed
contractors are allowed to pull permits. If your contractor wants you to pull permits
for your project, you should consider that a red flag and investigate further,
Hicks said.
Contractors cannot acquire a rating on Angie's List until a member of Angie's List reports on his/her interaction with the company. Once a company is added
to the List, Angie’s List contacts the company to provide information to be
displayed in its profile for member review that includes whether the company is
licensed, bonded and insured, as well as contact information and other details
members find helpful.
5 steps to verify contractor
credentials:
1. Determine if contractors must be licensed to perform the job. Many
municipalities have their own requirements in addition to, or instead of, state
laws. Check with local departments of commerce, consumer affairs or
professional regulators.
2. If licenses are required for your project, ask for a trade license number — be
sure you don’t receive a business or occupational license number.
3. Ask for proof of bonding and insurance, in addition to licensure.
4. Check that all are current and cover your project. Most state licensing boards
have an online database you can search, or a hotline you can call, to make sure
contractors’ licenses are valid and current. While you’re there, check if the
contractor has ever been disciplined.
5.Keep all paperwork involved in your project, including proof of licensing,
bonding and insurance, the contract, invoices, proof of payment, and all
letters and e-mails. Photos of the job in progress can be helpful, too.
5 terms every homeowner should understand before they hire
License: Trade licenses are
mandated by state, county and local laws. A license generally requires paying a
fee, passing competency tests about business practices and trade skills, and
showing proof of insurance. Some municipalities also require a background or
credit check and fingerprint contractors.
Bonding: Bonding is a bit
like insurance in that contractors arrange with a private bond issuer or a
recovery fund held by the licensing municipality to set aside funds to use if projects
go wrong. Homeowners may petition for reimbursement through the fund if
contractors harm them financially because of shoddy work or failure to pay
subcontractors as promised.
Insurance: At a minimum, all
contractors should carry liability and workers’ compensation insurance.
Liability insurance — Covers
property damage and bodily injury losses that occur as a result of the
contractor’s work. Liability insurance will not normally pay the cost of
removing, repairing or replacing bad work by the contractor.
Workers’ comp — Provides
payments to injured workers, without regard to who was at fault in the
accident, for time lost from work and for medical and rehabilitation services.
It also provides death benefits to surviving spouses and dependents.
###
Angie’s List is where
thousands of consumers share their ratings and reviews on local contractors and
companies in more than 425 different categories. Currently, more than 750,000
consumers across the U.S.
rely on Angie’s List to help them find the right contractor or company for the
job they need done. Members have unlimited access to the list via Internet or
phone; receive the award-winning Angie’s List magazine, which includes articles
on home improvement and maintenance, consumer trends and scam alerts; and they
can utilize the Angie’s List complaint resolution service. Get more information
about Angie’s List at http://www.angieslist.com View the
latest Angie's
List News Releases in our Press
Center and read Angie’s blog at http://www.angiehicksblog.com.