You got three quotes for a bathroom remodel. You went with the middle one because the guy seemed trustworthy and came recommended by someone at work. Six weeks later the project is half-finished, the contractor is asking for more money than the contract specified, and he has stopped returning calls. This is the most common home improvement story in America — and the one that three specific checks, made before you sign anything, would have prevented in most cases.
Vetting a contractor is not complicated. It takes about thirty minutes per candidate and requires checking three things: their license, their insurance, and the written scope of work before you commit. Homeowners who skip any one of these three steps are the ones who end up in contractor disputes.
Check the License — And Do It Yourself
Every state that requires contractor licensing maintains an online verification database. General contractors, electricians, plumbers, HVAC technicians, and roofers are all typically licensed trades. The database is usually run by your state’s Department of Consumer Affairs, Department of Labor, or Contractor Licensing Board — a quick search for “[your state] contractor license lookup” will find it.
Ask every contractor for their license number before you schedule them. A licensed contractor will give it to you without hesitation. Type it into the state database yourself. You are confirming four things: the license exists, it is current and not expired, it is in the right trade category for your job, and there are no open complaints or disciplinary actions filed against it.
An unlicensed contractor is not simply inconvenient — they represent a specific financial risk. In most states, an unlicensed contractor cannot legally pursue a mechanics lien against your property if you dispute payment, which is the main enforcement tool contractors use. But more importantly, if something goes wrong — a worker is injured, work is done incorrectly, building code is violated — you have significantly reduced recourse against someone who was never licensed to do the work in the first place.
Require a Certificate of Insurance — Not a Verbal Assurance
Two types of insurance matter: general liability and workers’ compensation. General liability covers damage the contractor causes to your home or property during the project. Workers’ compensation covers medical costs and lost wages if one of their workers is injured on your property.
Without workers’ comp, a worker injured at your house can potentially file a claim against your homeowners insurance — or sue you directly if your coverage is insufficient. This is not a theoretical risk. It happens to homeowners who hired contractors who seemed perfectly legitimate.
Ask for a Certificate of Insurance before any work begins. This is a standard document that any insured contractor can produce in minutes from their insurance broker. The certificate should name you as the certificate holder. Call the insurance carrier directly to confirm the policy is active — certificates can be outdated. An insured contractor will never object to this process. A contractor who hesitates, makes excuses, or says “I’ll bring it when I start” is telling you something important.
Get a Written Scope of Work Before You Pay Anything
A signed contract is not the same as a detailed written scope of work. A contract that says “bathroom remodel for $18,000” with a signature is nearly worthless in a dispute. A contract that specifies the tile brand and SKU, the fixture models, who pulls the permit, what the payment schedule is, what constitutes project completion, and what happens if the work takes longer than estimated is a document you can actually use.
The scope of work should answer: What specifically is being done? What materials are being used, with specific product names where relevant? Who is responsible for obtaining permits? What is the payment schedule — and it should never be more than 10 percent upfront for a large job? What is the project timeline? What defines satisfactory completion? What is the process for handling scope changes?
Changes to the original scope during a project — called change orders — should be handled in writing every single time, with a revised cost and timeline documented before the change is made. Verbal agreements about additions and modifications are the origin of most payment disputes. If a contractor resists putting changes in writing, stop the project until it is documented.
The Reference Check Most Homeowners Skip
References from recent, comparable jobs are your most direct signal of what hiring this contractor will actually be like. Ask for three references from projects completed in the last eighteen months that are similar in scope to yours — not a kitchen reference when you are hiring for a roof. Call all three.
The useful questions are not “was the work good?” The useful questions are: Did the final cost match the estimate? Was the project completed on schedule? Were there any surprises or issues, and how did the contractor handle them? Would you hire this contractor again? The answers to those four questions tell you almost everything you need to know about working with that contractor.
A contractor with no recent references in your trade category, or one who provides references but discourages you from calling them, is a significant red flag. A contractor who makes it easy — who hands you a list of names and numbers without being asked — is telling you something positive about their track record.
The Payment Schedule That Protects You
Never pay the full amount of a job upfront. Never pay more than 10 percent as a deposit for projects under $25,000. The payment schedule should be tied to specific completion milestones — not to dates or the contractor’s cash flow needs.
A reasonable structure for a $20,000 renovation: 10 percent at signing, 30 percent when materials are delivered and rough work begins, 30 percent at a defined midpoint milestone, 25 percent near completion, and 5 percent held until you have done a final walkthrough and confirmed every item on the punch list is resolved. The final 5 percent retention gives you real leverage to get outstanding items finished.
Contractors who insist on more than 10 to 15 percent upfront are often managing their cash flow from project to project — which means your prepayment funds the completion of someone else’s job, and you are dependent on future payments from other clients to fund yours. That is a risk you do not need to take.
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