Home projects are some of the largest purchases most households make, and they are also among the most common sources of consumer complaints. Whether you need a plumber for a leak, an electrician for a panel upgrade or a crew for a kitchen remodel, the same handful of checks will protect you.
1. Confirm the license with the state or local authority
Licensing rules for trades are set by states and, in some places, by cities or counties. Many states license general contractors, and electrical, plumbing and HVAC work is licensed in most states. Search for your state's contractor licensing board (for example, California's Contractors State License Board) or your city's licensing office and look up the business by name or license number.
- Check that the license is active and covers the type of work you need.
- Make sure the name on the license matches the name on the estimate and contract.
- Look for any disciplinary actions, complaints or bond claims the board publishes.
2. Ask for proof of insurance
Ask for a certificate of insurance showing general liability coverage and, if the business has employees, workers' compensation. Without these, an accident on your property could become your problem. You can call the insurer listed on the certificate to confirm the policy is current.
3. Get at least three written estimates
Comparable, written estimates make it much easier to spot a bid that is unrealistically low or padded. A good estimate itemizes materials, labor, the scope of work, who pulls permits, clean-up and a start and finish date.
| Look for | Be cautious of |
|---|---|
| Itemized scope, materials and brand names | A single lump-sum number with no detail |
| Clear payment schedule tied to milestones | Large cash payment demanded before work starts |
| Written warranty on labor and materials | Verbal promises only |
| Business address and license number on paperwork | Door-to-door offers using "leftover materials" |
4. Know who pulls the permit
Structural, electrical, plumbing, roofing and many HVAC jobs require a building permit from your city or county. Permits trigger inspections, which are an independent check on the work. A contractor who suggests skipping the permit to save money is also skipping that protection, and unpermitted work can complicate insurance claims and a future sale. Most local building departments let you search permit records online.
5. Pay in a way that protects you
- Avoid paying the full amount up front. Some states cap deposits on home improvement contracts; California, for example, limits most down payments to 10% of the contract price or $1,000, whichever is less.
- Pay by check or card rather than cash so there is a record.
- Tie payments to completed stages and hold the final payment until the job passes inspection and you are satisfied.
- Ask for lien releases from the contractor and major suppliers before the final payment.
6. Special cases worth knowing
Older homes and lead paint
If your home was built before 1978, renovation that disturbs painted surfaces should be done by a firm that is EPA Lead-Safe Certified under the Renovation, Repair and Painting (RRP) rule. You can search for certified firms on the EPA website.
Storm damage
After severe weather, out-of-area crews often go door to door. Take your time, verify licenses as above, and be wary of anyone who asks you to sign over insurance benefits on the spot.
How to read reviews for trades
Reviews are useful for patterns, not individual stars. Look for detail about the type of job you need, how the company handled problems and whether complaints mention the same issue repeatedly. The Federal Trade Commission's rule on consumer reviews, which took effect in October 2024, prohibits businesses from buying or selling fake reviews, but enforcement is not perfect, so treat a sudden burst of vague five-star reviews with caution.
Frequently asked questions
Do I really need three estimates?
Not always, but comparing at least two or three written, itemized estimates is the easiest way to spot a bid that is unusually high, low or missing key work.
How do I check if a contractor is licensed?
Search your state's contractor licensing board, or your city or county licensing office, by business name or license number, and confirm the license is active and covers the work you need.
Is it a red flag if a contractor wants cash up front?
A request for a large cash payment before any work begins is a common warning sign. Pay by check or card, keep deposits small and tie payments to completed stages.
Sources are official government, regulator and professional-body resources named in the text. We do not accept payment from any organization mentioned. See our editorial standards.