Licensed. Bonded. Insured.  

In the contracting world, there is a lot of emphasis on placed on these three words. Contractors make a point of using them on their websites and in their advertising. These words make the people using them sound credible, but what do they mean?  

Below are explanations for what contractors are saying when they use these three words to describe themselves.  

Licensed

A licensed contractor is registered with and has a license to operate within the state they work in. Some states are more specific than others about which types of contractors need to be licensed, and what is required to get that license. Most states have an online database of contractors working in their state. Arizona has a contractor inquiry tool on the state Registrar of Contractors (ROC) website.  

Bonded

A bonded contractor has a bond. If you do not know what a bond is, think of it as a prepaid saving account with a bank or insurance company. The contractor has a specific amount set aside to give back if they do not complete a project according to contract. That amount is determined by how much work (in dollars) a contractor does each year. In Arizona, bond information is required for licensing. Bond information for a specific contractor can be found by using the ROC inquiry tool.  

Insured

An insured contractor will have general liability insurance (or GLI). There is no search online to verify a contractor has GLI. Potential clients need to request a copy of their contractor's certificate. They should then contact the insurance agent listed to make sure the GLI policy is active.  

Having a licensed, bonded, and insured contractor working on a project is an important part of completing it. Knowing what those words mean and how to check a contractor's status before you hire them is even more so.  

If you have any more questions about terms specific to the construction industry, drop us a line here.