What is LICENSED, BONDED, Insured ?

Do you ever wonder what licensed, bonded, and insured means?  We get questions about that every year.  Anyone can say they are licensed, bonded, and insured, but are they really?  Lets dig deep so you know what RED FLAGS to look for and what to ask a contractor when hiring? Spoiler Alert, this is a long post with a lot of good information.

Licensed

You can hold a license for a specific field of work by the state, county, or city.  This varies depending on where you live.  For a state license in South Carolina you can check to see if someone has the proper license by going to the South Carolina LLR site.  This site is super important if you were renovating a house, hiring an accountant, going to the dentist, as well as many other occupations that have to be licensed to do work in South Carolina.  Unfortunately lawn care, landscaping, and outdoor living projects for the most part do not require any kind of license.  A license is required for forestry and only applies if you are logging wood, it does not apply to your standard tree service company.  The other license required for outdoor work is landscape architects.  Everything else is not covered in any state license.  So why are tree companies and lawn care companies saying they are licensed to work?  Some are lying and some are using loose wording to say they hold a license to do work in a city.  For example, ALL Outdoors holds a license in the City of Greer to do work.  This means nothing for you as the client.  I did not get training, they didn't check out my company, I didn't take any test from Greer City to show I am qualified to do the work I am doing.  This means I pay a percentage of my gross sales to do work in the city.  Nothing too it, all about the money.  Many other cities require this too, but it is nothing to you the homeowner.  So if you are looking to hire someone to mow your lawn, take out trees, or build a retaining wall or patio they don't need a license; although there are other things you need to check. 
On a side note if someone in this line of work said they are licensed, bonded, and insured, I would say RED FLAG.  If they are lying or using loose wording here, I will be willing to bet they will lie about other things.

Bonded

Big RED FLAGS should go up right away if any lawn care, landscaping, tree services, or outdoor living business says they are bonded.  First there are many different kinds of bonds that apply to different businesses.  We are not going into detail about that, but a typical bond normally covers large projects up to a million dollars.  For example in the home renovation business you pay a contractor 50,000 to redo your kitchen.  In simple terms this bond will insure that your kitchen gets done even if the contractor skips town or can't finish the project for some reason.  You don't need a bond in lawn care, if your lawn care contractor stops coming, you just hire someone else.  This is the same for tree and landscaping companies, they don't come you just hire someone else.  One thing I should note here is to NEVER PAY for any service upfront that does not require material.  For example don't pay for lawn care service for the entire season upfront.  This is a RED FLAG that they don't know how to manage money.  Most lawn care companies that offer discounts for upfront payment for the entire season go out of business.  I have seen this happen time and time again.  Don't pay for tree work before it is performed or finished.  If material, such as mulch, pavers, retaining wall block, etc, is required most contractors will ask for 50% deposit upfront.  This is a standard practice and you should pay; but make sure to check prior work and get at least 4 references before paying the deposit fee for material.  Some outdoor living companies are bonded, but it is not standard practice.  For me the bond is not important for building your outdoor dream, references are more important.  I always tell clients what you don't see is more important that what you see.  A contractor can be bonded and finish your project and your paver patio can start falling apart in a year.  The bond will not cover this, as the project is over and was completed.  This is caused by a improper base being installed under your patio, this is where references come in.  Ask for older references and newer references so you can see how there work stands up to time.  

Insured 

This is the most important of the three.  Insurance is required, and every lawn care, landscaping, and outdoor living company should have THREE kinds of insurance. 
The first kind of insurance a company should have is general liability insurance.  This insurance can be very costly for a company, but very important.  General Liability will help to protect you the homeowner from a lawsuit if someone gets hurt. A few years ago I took a training class on safety and a great example was told on why you must have general liability and safety within your company.  Somehow a screw driver was left in the grass on a property.  The lawn care company came and mowed and did not see the screw driver in the grass.  The mower hit the screw driver, it shot in the air and went through a car driving by, hitting the person driving, and killed them.  The property owner was responsible because the lawn care company did not have general liability.  Another story I heard from a neighbor was about hiring a painter.  The painter fell and broke his arm.  The painter had no general liability policy, and while the painter did not sue the homeowner, the hospital did.  The homeowner lost and had to pay the painters medical bills.   Another question I often hear is "Is it ok to let the kid down the street mow by lawn?"  I would say no, unless that kid has general liability insurance.  I have heard of lawsuits involving the kid down the street who got hurt or hurt someone else.  Accidents happen, general liability protects the kid down the street from suing you.  If the kid down the street wants to run a business, make sure they are running a legit business.  I network with a kid who is now 16; he started his business when he was 14.  He now has 4 employees, 2 trucks, and runs a great lawn care company.  He is the kid down the street with general liability insurance and the one I would hire.  General Liability is very important and all companies should have it.  Ask all contractors you that do work on your property to provide you with a current copy of the policy.  You can also ask that the insurance company to send you a direct copy of the policy.  
The second type of insurance all contractors should have is workers comp.  This insurance will protect you as the homeowner if one of the contractor's employees gets hurt on your property.  Example,  a tree company is cutting a tree down in your yard.  An employee is not careful and gets cut by the chainsaw.  If the companies does not have workers comp you as the homeowner are responsible for the employees medical bills.  Your contractor should be able to have to provide you with a current copy of the worker comps policy and get the insurance company to send you a copy.  Make sure any contractor you hire has a workers comp policy.
The third type of insurance all companies should have is automobile insurance.  This policy normally doesn't effect homeowners, but it could.  If your contractor pulls up at your house and accidentally hits your car, you, your house, you could be in a lawsuit because they have no automobile insurance.  This is another insurance that you can ask for, but I wouldn't worry about it too much.  If they provide you with general liability and workers comp policies, I would be willing to bet they have automobile insurance.     

In conclusion the real questions you need to ask are...

• Do you have general liability insurance and can you provide me with a copy?
• Do you have workers comp insurance and can you provide me with a copy?
•  Can you provide me 4 references?
• Can I see current work?

These questions will get you off to the right start.  Hope this helps you find the right contractor to work with this season.  We would love to hear your stories about hiring the wrong contractor or RED FLAGS related to license, bonded, and insured contractors.  We will feature these stories this Friday, February 21, 2018 on this blog and Facebook.  Email us at [email protected] or drop a RED FLAG story below or leave a comment below. 

​By: Ashley Haynes
Copyright ALL Outdoors 2018