How to Check if a Contractor Is Licensed, Bonded, and Insured

"Licensed, bonded, and insured."

Contractors say it. Websites display it. Business cards print it. But when an HOA board, property manager, or homeowner tries to confirm what that phrase actually means for a specific contractor, the answer is often less clear than the claim.

Licensed and insured are not the same thing. Bonded and insured are not the same thing. A contractor can be licensed but not insured. Insured but not bonded. Bonded but with an expired bond. Registered with the state but in a specialty that does not cover the work you need.

Each credential is maintained in a different system, verified through a different process, and can lapse independently of the others. Checking one does not confirm the rest.

What "licensed" actually means

In most states, contractors must register or hold a license to perform construction work for compensation. The specific requirements vary by state, but the concept is the same: the contractor has filed with a state agency and met minimum requirements to operate legally.

In Washington, that means registration with the Department of Labor and Industries (L&I) under RCW 18.27. In California, it means a license from the Contractors State License Board (CSLB). Other states have their own agencies and rules.

What to check:

• Status — "Active" is the only acceptable status. "Expired," "Suspended," and "Revoked" are not.
• Specialty or classification — A contractor registered for plumbing is not necessarily registered for electrical work. If the work crosses trades, you may need a general contractor.
• Expiration date — Registrations expire. A license that was active six months ago may not be active today.

The most common mistake: assuming that because a contractor was licensed when you first hired them, they are still licensed now. Registrations lapse. Check before every new project, not just the first one.

What "bonded" actually means

A surety bond is a financial guarantee. If the contractor violates the law or fails to perform, the bond provides a pool of money that affected parties can claim against.

In Washington, general contractors must carry a $30,000 surety bond. Specialty contractors must carry $15,000 (effective July 2024). These amounts are statutory minimums — they do not scale with project size.

What to check:

• Bond status — Active, not expired. Bond expiration dates are visible on the state record but are separate from the registration expiration date. A contractor can be registered and have an expired bond.
• Bond amount — The statutory minimum may be far less than the value of the work being performed. A $15,000 bond on a $150,000 roofing project offers limited recovery if something goes wrong.

What bonded does not mean: a bond is not insurance. It does not cover property damage, personal injury, or construction defects. It covers a narrow set of statutory violations. Boards that treat bonding as a substitute for insurance are relying on the wrong protection.

What "insured" actually means

Insurance is where the real protection is — and where the real gaps hide.

A contractor who says they are insured may carry one, some, or all of these:

General liability — Covers bodily injury and property damage caused by the contractor's operations. This is the baseline. A landscaper drives into a gate. A painter damages a walkway. A roofer drops debris onto a car. General liability responds to these events. Look for at least $1 million per occurrence.

Workers' compensation — Covers injuries to the contractor's employees on the job site. Required by law in most states for contractors with employees. Without it, an injured worker can file a claim against the property owner — which, for common area work, is the HOA.

This is the coverage most likely to be missing and the one with the highest consequences when it is. Note: sole proprietors with no employees may not be required to carry workers’ comp in every state, but the HOA’s exposure does not change — if an uninsured worker is injured on common property, the association can still be named.

Commercial auto — Covers damage from contractor vehicles on the property. A contractor can have general liability and no commercial auto. If a truck hits a structure or a parked car on HOA grounds, commercial auto is what responds — not general liability.

Umbrella/excess liability — Additional coverage above the limits of underlying policies. Relevant for large capital projects where potential losses exceed standard policy limits.

The most dangerous gap: a contractor who has general liability but no workers' comp. The board sees "insured" and assumes the association is protected. A crew member falls off a ladder, and the HOA discovers it is exposed because the one coverage that mattered for that scenario was never in place.

How to actually verify

Saying "I'm licensed and insured" is not verification. Here is what verification actually looks like:

License

Look up the contractor on the state licensing database. In Washington, that is the L&I Verify a Contractor tool. In California, the CSLB license lookup. Confirm the status is active, the specialty matches the work, and the expiration date has not passed.

Bond

The bond status is usually visible on the same state record as the license. Confirm it is active and note the amount. Remember that the statutory minimum may be well below the project value.

Insurance

Request a current Certificate of Insurance (COI) dated within the last 30 days. Verify:

• Named insured matches the contractor's legal business name
• Policy dates cover the full project timeline
• Coverage types and limits meet your requirements
• The HOA is listed as an additional insured on the general liability policy
• Workers' compensation appears as a separate line item

A COI from the bid process is not proof of current coverage. Policies can cancel the day after a certificate is issued. For high-value projects, request a cancellation notice provision so the HOA is notified if coverage lapses.

W-9

Not a safety credential, but a compliance requirement. Collect a W-9 before the first payment for 1099 reporting.

The gap between "on file" and "currently valid"

The most common failure is not missing documents. It is stale documents.

A board collects a COI, a license number, and a bond reference during the bid process. They file everything. Work starts two months later. By the time the first invoice arrives, the insurance may have lapsed, the bond may have expired, or the license may have been suspended — and nobody checked because the file "looked complete."

This is where most vendor files break down: not at collection time, but at verification time. The documents exist. They just do not prove what the board needs them to prove at the moment the payment is approved.

How BuildRated handles this

BuildRated pulls license, bond, and insurance verification data from state databases and tracks credential status as part of every contractor profile. The daily compliance check flags any change — expiration, suspension, lapse — and notifies HOAs that have a payment relationship with that contractor.

The BuildRated score summarizes the contractor's overall compliance posture across 18 signal categories. It does not rely on self-reported data or directory profiles. It measures what is verifiable. For the full scoring methodology, see How the BuildRated Score Works.

The VECR (Vendor Eligibility and Compliance Record) packages all of this — credential status, compliance continuity, payment history, violation summary, and eligibility determination — into a single point-in-time document designed for board review, audit, and payment approval. For the full specification, see VECR: Vendor Eligibility and Compliance Record.

The distinction matters: "documents on file" is not the same as "verified current." BuildRated tracks the difference.