Contractor License Process Too Complicated For Consumers

Angie Hicks

By: Angie Hicks - Founder, Angie's List

Category: Consumer

For as long as Angie’s List has been offering reviews of local service professionals, I’ve advised homeowners to hire licensed contractors, and to check the validity of any license claims before they hire.

Unfortunately, not every community requires contractors to be licensed. Only 15 states offer uniform licensing laws. The rest of them – including Indiana – offer a patchwork of rules that change when you cross city or county lines and apply to some jobs but not to others.

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To determine what trade licenses are required for what jobs in Indiana and Ohio, consumers have to sort through state licensing as well as local licensing , plus local registration requirements.

Marion County, for instance, requires general contractors and skilled trades to hold a county license. Some surrounding counties require only general contractors to hold a county license.

Our neighbors in Michigan, Illinois and Kentucky have to sort between local and state licensing laws.

Trade licensing is important because it typically means contractors have passed competency tests and provided proof of insurance or bonding, and often both. Even mandated registration, which is typically less stringent than licensing, usually offers at least one or more of these consumer protections.

Liability insurance, for instance, covers property damage and injuries caused by a contractor’s work. Workers’ comp provides payment to injured workers. Bonding covers the costs of repairing or replacing shoddy work. Homeowners could be liable if their contractor isn’t properly covered in these areas or, worse yet, holds no coverage at all.

We’re asking lawmakers to take a look at their licensing laws to determine if they provide their constituents with equal and adequate consumer protection. Laws should be clear, easy to understand, and enforceable. We think many lawmakers will agree with us that they can do better.

But Angie’s List can do better, too, and we’ve already toughened our policies on licensing.

Our general practice had been to include information about the companies rated on Angie’s List on their company profile, including basics like phone, address and leadership, as well as accreditation and licensing information. We have always taken the contractors’ word that the information they supply us is accurate.

We’re not doing that anymore. Several weeks ago, we began requiring the companies on Angie's List to attest that they’re in compliance with all applicable trade licensing laws. Contractors found to be out of compliance will have an opportunity to comply or face actions from Angie's List that include alerting members to their true status.

Much like the IRS audits taxpayers, we’re going to audit contractors on Angie's List to ensure their compliance. We’ll alert our members if we catch anyone trying to fool the system. At the same time, we're asking them to alert us as well — and to become more vigilant in verifying the compliance of every contractor they hire.

We recognize that some areas don’t provide as much licensing protection or reliability as others. In some cases, regulation is little more than a tax on the trades and provides no homeowner protection whatsoever. But whether or not we support a law is not the issue. The bottom line is, where trade licensing laws exist – and until lawmakers take necessary action to improve them –contractors should be expected to comply with them.

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