Insurance

A business license is important, but don't mistake one for a trade license demonstrating skill competency.

Bonding

"Bonding" may be the least well-understood of the three terms. A bond means the contractor has put up a certain amount of money to a regulatory authority or been issued a surety bond by a third-party company. These bonds cover the costs if something goes wrong with the project that is the contractor's fault.

Bonding rules vary greatly from place to place, and not all contractors must hold a bond, so look into your local rules to determine what you need to verify with your contractor.

Insurance

Insurance is perhaps the most universal of these three listed elements. Not all jobs require a license or bonding, but even if you hire someone to come into your house and hang some paintings, you want them to carry the proper insurance.

This insurance will cover damages if they damage something in your home, for instance. And most importantly, worker's compensation insurance means that the expenses will be covered if the contractor or one of their employees is injured while on your property.

Anything that happens involving an uninsured worker in your home could end up becoming your direct financial responsibility. Thus, it's essential to verify insurance with all contractors.

Any legitimate contractor will be happy to provide written verification of insurance; it's a sign that both you and they take their work seriously.

Tweet your home-care questions with #AskingAngi, and we'll try to answer them in a future column.