What does it mean when a business says they are licensed and insured?
Licensing can refer to a number of professional licenses that may be required or recommended for different industries. Licensing requirements for the landscape industry can vary from state to state. In Maryland, for example, landscape contractors are not required to have a business license, though some may apply for a business license under the construction category. However, there are several professional licenses that are recommended or required for some services within the landscape industry.
Some examples? The State has licensing requirements for companies that provide pesticide applications (for both the business and individual applicators with the business), fertilizer applications, tree services, home improvement services, and erosion and sediment control. The pesticide business license and applicator license have categories for specific applications like aquatic, forest, and turf. The Maryland Home Improvement Commission (MHIC) provides licensing for all contractors offering any type of home improvement services, which includes an “improvement to the land adjacent” to the home.
Business insurance comes in several categories. The two types of insurance a customer should care about before hiring a contractor are Commercial Liability insurance and Workers’ Compensation insurance. A company with business insurance will be able to show a certificate of insurance (COI) showing the types of insurance and coverage limits. In addition to the commercial general liability policy and workers’ compensation policy, companies may also have lines on the COI showing business auto and an umbrella policy.
Does it matter if the landscape company I hire is licensed and insured?
Yes! While licensing may not be required for certain services, it is required for others. It is important to know what services require licensing (like pesticide, fertilizer, and home improvement) and that you, the homeowner, make sure the company you hire has the required licensing. When the State approves a license application for a business, that tells you that the company you are hiring has the knowledge to perform the work correctly and follows any laws that regulate the work being performed. Hiring a company that is properly licensed also protects you if something goes wrong! The Maryland Home Improvement Commission has a Guaranty Fund and provides a process to file a claim if something goes wrong and you feel the company has not handled the problem correctly. The Commission will also suspend the license of a company due to a heavy volume of claims against them. But you can only file a claim through the Guaranty Fund if you hire a contractor that has an MHIC license.
Business insurance protects both the business, the company’s employees, and you, the homeowner. This shows the company has coverage to take care of their employees if an injury occurs. It also means the insurance can cover certain damage to your property if something goes wrong. Even if a company is performing work that does not require licensing, business insurance is an important protection for you when hiring someone to perform work at your home.
How does it impact the homeowner if a company is not licensed and insured?
Let’s be honest, almost every homeowner has been in a situation where they have received quotes from a licensed and insured company and a person who isn’t licensed and insured for the same work. And we’re willing to bet the person who isn’t licensed and insured came in with a lower price than the company that is. And why wouldn’t they? Being licensed and insured is an additional cost. That cost goes into a company’s overhead and overhead costs like insurance and taxes are built into quotes from those companies.
So, it makes sense for you to ask, should it really matter to you if a company is licensed and insured? And does it matter enough to pay a higher price for the work? The answer is yes! Hiring a licensed and insured company protects you. Licensing shows you the company is serious about doing work correctly and knows how to do that! Someone who does not have the appropriate license may not know the work they are doing is incorrect. And, if they don’t have the license, you most likely have very little recourse if there is a problem with the work.
Hiring an insured contractor gives you peace of mind. Did you know that if you hire someone to perform work on your property and they get hurt, you may be legally responsible for the injury? If the contractor is insured, workers’ compensation insurance would be the primary source for covering their injury. But if you hire someone without insurance coverage, your homeowner’s insurance could bear the burden of covering the injury.
But hiring a licensed and insured company offers other protections to you as well. Let’s look at another common example.
If I hire the neighbor’s kid to mow my lawn, who is responsible for paying if he breaks a window?
The reality is you, as the homeowner, will bear the ultimate responsibility for paying for damages if you hire someone other than an insured company to do work on your property. We aren’t saying you should never hire your neighbor’s kid to do some yard work or mow your lawn. Many kids use that as an opportunity to earn some money and learn responsibility. But you should be aware of the risk you take when you do so. No matter how careful a person is, it is possible to throw a rock and break a window or damage a car in the process. Even trained professionals do it sometimes. If you have hired the neighborhood kid, it is possible their parents will feel some responsibility and pay for the replacement, or make their kid take care of it. It is also possible their parents will say that you chose to take that risk by hiring a kid and getting a deal for yourself instead of hiring the licensed and insured company to perform the work.
So, now ask yourself. Is the cost of hiring an unlicensed and uninsured company worth the risk?
Do you want to be responsible for paying for costly repairs if the work isn’t performed well, or even completed at all? Do you want to risk being responsible if someone gets hurt or damages your property? What are you potentially costing yourself by trying to save some money on the project?
Four Seasons Landscape & Construction Services is a woman-owned and certified Small Business Enterprise (SBE) company with the goal of providing our clients with a knowledgeable and trustworthy contractor to take care of any outdoor projects. A list of our licenses and certifications can be found on our contracts, website, social media, and listed in our email signature to provide you with peace of mind knowing we have the expertise and experience to take care of your property as if it were our own! And you can see further proof of our licensing and insurance as a contractor for multiple agencies for Harford County and Baltimore City.