Finding a qualified contractor to rebuild or repair your home will be one of the most important decisions you will make. Contractors who specialize in fire and flood restoration are generally more familiar with the methods of restoration than home remodelers or new home builders. Restoration contractors can also be of great help in the insurance claims process because they can provide detailed estimates and support documentation in the format preferred by insurance companies. Your insurance adjuster may recommend a contractor or encourage you to use one of their "preferred vendors". Such vendors may not be the most qualified or the best suited for your work, even if the insurance company "guarantees" the contractor’s work. Understand that if the insurance company fails to remedy shoddy or defective work performed by their "preferred vendor," you may not be able to sue the insurer for bad faith. Courts have held that you may sue the insurance company for the cost of correcting work guaranteed by the insurance company, but nothing more. In any event, the choice of the contractor is ultimately your responsibility, and it is critical that you spend the time and energy it takes to choose a qualified contractor.

Beware of Unlicensed Activity

Beware of unlicensed people that may solicit to rebuild your home or want to act as your "construction consultant". These services require a valid general contractor's license issued by the Contractors State License Board (CSLB). All licensed contractors in the State of California are investigated and held accountable by the CSLB. Be especially wary of any unlicensed contractor who promises to save you money by suggesting that you act as your own "general contractor", as an Owner-Builder, while they act as your construction consultant. If you use unlicensed contractors in this manner, all the responsibility, risk, and liability is yours, including injuries sustained by an unlicensed person or their employees, correcting construction defects, dealing with mechanic's liens, etc. The risk of hiring someone who is not licensed comes with potentially serious consequences.

As an Owner-Builder, you will be required to comply with all laws pertaining to employers, which includes workers' compensation insurance, withholding taxes, social security, paying disability insurance, making employment compensation contributions, etc. You will be responsible for making timely payments to employees and vendors, responding to any mechanic's liens, guarding against the violation of labor laws and environmental regulations, and a host of other potential problems. You can also be held personally liable for any and all bodily injury, disease, death, or property damage that arises out of the work.

For more information on your responsibilities as an Owner-Builder, visit the CSLB website at or call 1-800-321-CSLB (2752).

Salespeople and Street Solicitation

After a disaster, sales people often go door to door, canvassing neighborhoods to generate business. While many of these people are honest and reputable, some may not be. Be especially suspicious of door-to-door salespeople who make unrealistically low estimates, offer free improvements, or attempt to sell their services by playing on your emotions. Deal only with local licensed contractors. Ask to see the contractor's "pocket license," together with other identification. If the person claims to be representing a contractor but can't show you a contractor's license or home improvement salesperson registration card, call the contractor and find out if the person is authorized to act on the contractor's behalf. Check the status and information of the contractor on the Contractors State License Board Website at The Contractors State License Board governs contractors in the State of California and this site contains a wealth of information to assist you in the interviewing process.

Some things you will want to consider when researching a contractor on the CSLB website are:

  • Is the contractor licensed?
  • Is the contractor named on the license as an owner, officer, or Responsible Managing Officer?
  • Is the contractor associated with other licenses that may have had problems in the past?
  • How long has the contractor been licensed?
  • Is the salesperson who solicited you, licensed as a home improvement salesperson on the contractors' license?
  • Is the contractors' license in good standing, meaning not suspended, revoked, or expired?
  • Does the contractor have any disciplinary actions pending?
  • Does the contractor license classification meet the criteria to rebuild your home? Is the license a "B" General Contracting license or a "C" Specialty Trade license that would apply to a specific trade such as plumbing, electrical, or roofing, etc.?
  • Is the contractor local and is the address on the license a physical location or a P.O. Box?

License Look-Up is Easy

Checking a contractor's license is easy. Simply use CSLB's web site to verify a contractors' license and to be sure there is a clean disciplinary record, go to You can look up the person by contractor number, business name, or employee name(s). Identical information is available by calling the CSLB's toll-free automated number: 1-800-321-CSLB (2752). If you or neighbors believe you have been scammed by anyone claiming to be a contractor in any construction field, please notify CSLB with as much descriptive information as possible and a vehicle license plate number. In southern California, call 562-345-7600; in northern California, call 916-255-2924.

For more information on how to choose a contractor, go to the home page again and click on the "General Info" tab, then click on the "Disaster Information Center" link. Then click on "After a Disaster, Don't get Scammed Pamphlet" to find several useful tips to finding the right contractor. In addition, you can order a free copy of the 230 page book called "California Building Performance Guidelines for Residential Construction". Verify the contractor's workers' compensation and commercial general liability insurance coverage. A licensed contractor must provide you with information regarding both types of insurance in your written contract.

Workers' Compensation Insurance

In California, contractors are required by law to carry workers' compensation insurance for their employees. Always check to see that your prospective contractor carries workers' compensation insurance and that it is current and in force. Do not do business with a contractor who does not carry the appropriate insurance coverage. If the contractor is not insured, you may be liable for accidents that occur on the property.

You can verify the contractor's workers' compensation insurance coverage by asking to see a "Certificate of Insurance" form. Such certificates are issued by insurance agents and brokers and provide the name of the contractor's insurance carrier, policy number, expiration date, and the contact information for the insurance agent or broker. It is a wise practice to call the agent or broker and verify the coverage. The importance of verifying this coverage cannot be overstated. If a worker is injured working on your property and the contractor does not have insurance, you could be liable to pay for injuries and rehabilitation. Your homeowner's insurance may or may not cover those costs. Check with your insurance carrier to verify the workers' compensation insurance coverage being provided by the contractor is adequate. If the contractor states that he or she is exempt from carrying workers' compensation insurance, they must not employ anyone. This includes salespeople, estimators, supervisors, project managers, and general laborers who may simply sweep or run errands, etc. Selecting a contractor that states they are exempt from carrying workers' compensation insurance is very risky.

While it can be very difficult to determine whether or not any particular worker is an employee of the contractor, the following information provided by the Internal Revenue Service may be helpful. This information comes from the Internal Revenue Manual - 4.23.5 (Technical Guidelines for Employment Tax Issues) and can be viewed at /part4/irm_04-023-005r.html Common Law Standard: "The common law rules for determining whether a worker is an employee, or an independent contractor are described in Treasury Regulations § 31.3121(d)-l(c). Under common law, a worker is an employee when the person for whom the services are performed has the right to control and direct the individual who performs the services. This control reaches not only the result to be accomplished, but also the details and means by which that result is to be accomplished. Note that control must be present but need not actually be exercised."

Common Law Factors

The following 20 common law factors are used by the IRS as guidelines to determine whether a worker is an employee or independent contractor. These questions are subjective and a worker may not have to meet all or most of these points to be classified as an employee.

Instruction: Does the contractor dictate to the worker when, where and how to perform the work? Furnishing of Tools and Material: Does the contractor provide the worker with tools, equipment, and materials to perform the work?

Set Hours of Work: Does the contractor dictate to the worker the work hours and schedule?

Full-Time Required: Is the worker required to devote substantially full time to the work of the contractor? Payment by Hour, Week, or Month: Does the contractor pay the worker by the hour, week or month?

Ability to Realize a Profit or Loss: Does the worker have the opportunity to realize a profit or loss? Right to Discharge: Does the contractor have the unilateral right to discharge the worker?

Training: Does the contractor provide direction, instruction, or training to have work performed in a particular manner? Integration: Does the worker provide services that are an integral part of the contractors' business that significantly affect its operations or success?

Services Rendered Personally: Does the contractor require that services be rendered by the worker personally?

Hiring, Supervising and Paying Assistants: Does the contractor hire, supervise and pay assistants to help the worker?

Continuing Relationship: Does the contractor maintain a continuing relationship with the worker?

Work Done on Employer's Premises: Is the worker required to perform the work at the contractors' premises?

Order or Sequence Set: Is the worker required to perform the work in any specific order or sequence set by the contractor?

Oral or Written Reports: Does the contractor require that the worker submit oral or written reports?

Payment of Business and/or Traveling Expenses: Does the contractor reimburse or pay the traveling expenses of the worker?

Significant Investment: Does the worker invest in and maintain the contractors' equipment or facility?

Works for More Than One Company: Does the worker provide simultaneous services for multiple unrelated companies or exclusively for the contractor?

Offers Services to the General Public: Does the worker make his or her services regularly available to the general public?

Right to Quit: Can the worker end his or her relationship with the contractor at any time without incurring liability?

If a worker is leased from a labor agency and is covered by workers' compensation by the agency, in the event of an accident, the workers' compensation insurer for the agency can subrogate against the contractor and the homeowner to recover the costs incurred by the injured worker, thus putting the homeowner at risk.

A homeowner may have no way to tell which people working on the property are leased laborers, independent contractors, or people actually hired by the contractor that are being paid under the table. Hiring a contractor who carries workers’ compensation insurance will help alleviate concerns regarding worker classification or liability in the event of an accident.

General Liability Insurance

Be sure that the contractor carries Commercial General Liability Insurance and that the policy is current and in force. In California, contractors are NOT required by law to carry commercial general liability insurance. It is important to ensure that your prospective contractor does carry it because it covers the contractor's risk of liability for bodily injury (including death or disease) and his risk of liability for damage to the property of others - including yours. If the contractor does not carry general liability insurance, you may be responsible for injury, death, or damage arising from the work.

Verify the contractor's commercial general liability insurance coverage by asking to see a "Certificate of Insurance" form. As with the certificate for workers' compensation insurance, this certificate should provide the name of the contractor's insurance carrier, policy number and expiration date, and the contact information for the insurance agent or broker so you can call and verify coverage. In addition, by law, the contractor's written contract form must provide you with information for both workers' compensation and if the contractor has it, commercial general liability insurance.

Recommendations To Protect Yourself

  • Never pay a contractor for the entire project in advance. and never pay for work that is not completed. In California, a repair contractor may not require you to pay more than $1,000 (or 10% of the contract price, if less) as a down payment on the work (except for work on swimming pools)
  • Federal law requires a three-day "cooling off" period for unsolicited door-to-door sales of more than $25.00, allowing you to cancel the contract
  • Request a current reference list of the contractor's clients that have had the contractor perform work that is similar to your project in size and scope. Ask to see the work performed by the contractor. Other good reference sources include insurance adjusters, agents, material suppliers, subcontractors, and financial institutions for financial viability
  • Ask to meet the project manager who will be designated to run your project. Being comfortable with the project manager is important because they will be responsible for the coordination and completion of the project
  • Contractors may use a salesperson to solicit a contract with you. Once the contract is signed, this salesperson may no longer be involved in the project. If a problem should arise, the salesperson may be powerless or unavailable to help you
  • Ask to meet the owner(s) of the company. The owner(s) will be the final decision maker for the company. Ask to what degree they will be involved with the project
  • Get a complete signed copy of the complete contract before you sign it. Never sign a contract that has any sections left blank. Read it in its entirety. If you do not understand any part of it, have an attorney review it. Hiring an attorney to review the contract could save you thousands of dollars and potential problems later on
  • Be sure the contract includes a full and complete description of the scope of work to be sure it covers everything you wish to have done. (and nothing more). The scope of work should be specific regarding all materials to be used, describing the quality, quantity, weight, color, size, or brand name as it may apply
  • Understand each and every term of the contract, including such terms as the payment schedule, completion date, workmanship guarantee, etc., before signing the contract
  • If changes to the contract are made during the work, update your contract with a written change order. This includes, among other things, changes, additions or deletions of the work or the materials to be used in the work, changes in the work schedule, the prices, or the completion date. Be sure every change order is signed by both parties, as it then becomes part of the written contract

For more information on contractors, the laws that govern them and their contracts, contact the Contractors State License Board (CSLB) at or call 1-800-321-CSLB (2752).