Licensed and insured: what to ask for before your builder starts

We get asked for our certificate of insurance maybe once for every ten contracts we sign. The other nine owners took the phrase on the website at face value. Most of the time nothing goes wrong and it does not matter. The one time a framer falls off a scaffold, or a fire in the tenant space next door gets traced back to a hot-work permit nobody pulled, it is the only thing that matters.

Licensed means something specific, and it depends on where you are

Texas does not license general contractors at the state level for commercial building the way it licenses electricians, plumbers and HVAC contractors. Some cities require a contractor registration to pull a permit. What this means for an owner is that the word licensed on a general contractor's truck should prompt a question: licensed for what, and by whom. The trade licenses are the ones that carry real weight. The electrician wiring your panel and the plumber setting your gas line must hold state licenses, and the permits are issued under those licenses. Ask the general contractor which licensed trades are on the job and who holds each license. We answer that in writing before we sign.

Insured is at least three policies

General liability covers damage the work causes to people and property that are not part of the job: the neighbor's roof, a guest in the hotel lobby, the car in the parking lot. Workers' compensation covers the people doing the work when they get hurt. Builder's risk covers the project itself, the framed building that burns or floods before the owner takes it over, and on most commercial jobs it is bought by either the owner or the contractor depending on the contract. Commercial auto covers the trucks. A contractor who says insured and carries only general liability is describing a third of the picture.

Ask for the certificate of insurance itself, not a summary. It lists each policy, the limits and the expiration dates. Have your name added to the general liability policy as an additional insured while the job runs. That is a normal request and the contractor's agent can issue it in a day.

Subcontractors are the gap most owners miss

The general contractor's workers' compensation covers the general contractor's employees. A subcontractor's crew is covered by the subcontractor's policy, if there is one. On a job with twelve subcontractors, that is twelve certificates the general contractor should have collected and checked for expiration before those crews stepped on site. Ask how that is tracked. The honest answer is a folder or a spreadsheet with dates in it, and the owner of the contractor should be able to open it in front of you.

One reason we keep our own crews for framing, drywall, millwork, stone, tile, paint, roofing, glazing, concrete and excavation is that those workers are on our payroll and our policies. Fewer outside crews means fewer certificates to chase and fewer places for a gap to hide. It is not the reason to hire a builder, but it shortens the list of things that can go wrong on paper.

What the paperwork should feel like

A builder who is properly set up will hand over the certificate, the trade license numbers and the sub tracking without hesitation, because they are routine. A pause, a promise to send it later, or a reassurance in place of a document is the signal. It is not proof of a problem, but it is a reason to wait before the deposit clears.

The person handling this on our side is a principal of the company, and the same person is on your site once the work starts. That matters because the coverage is only useful if someone with authority is present the day something happens, to call the agent, document it and keep the job moving toward the opening date.

We are licensed and insured, and the owner of the company will put the documents in your hand before the contract is signed. Send over the drawings and the paperwork will arrive with the estimate.