Licensed, Bonded and Insured: What Does That Really Mean for the Consumer?

You’ve pored over all the local plumbing and HVAC contractors in Grand Rapids, MN, asked friends and family for recommendations, read reviews, gotten estimates and compared prices. Now you’ve finally narrowed down your choices to two contractors. The main difference between the two is that one is a little more expensive, but they are licensed, bonded and insured, while the other is not, but they cost a little less. So now you are faced with one final question: Does it really matter if your contractor is licensed, bonded and insured?

You’re not alone in asking this question. Many consumers don’t fully understand what it means for a contractor to be licensed, bonded and insured, so it’s hard for them to justify the higher cost of working with these contractors. The truth, however, is that hiring a contractor who is not licensed, bonded and insured puts the consumer at serious risk. To help you better understand, here is a brief explanation of being licensed, bonded and insured and what it means for you, the consumer.


Licensing refers to whether or not the contractor is certified and trained to do the job. It also means that the contractor is aware of state standards and codes and, as a licensed contractor, is bound to follow those standards. If a consumer hires a contractor that is not licensed, there is very little that can be done to protect the consumer if the contractor does not follow state guidelines. Being licensed also means that the contractor can be held accountable if the job is not finished, or if it’s done incorrectly, whereas an unlicensed contractor can walk away from a job or do it poorly with little to no consequences.


A bond is a prepaid savings account with a bank or insurance company that sets money aside in case the contractor does not perform the job as agreed upon. The bond guarantees that the contractor will perform the job as specified in the contract between the consumer and the contractor. If the job is not performed as agreed upon, the bond is then used to cover any expenses to complete the job properly. A bond may also cover other expenses such as property damage, unpaid laborers, vendor bills and so on.


An insured contractor has liability insurance to cover any accidents that might occur during a job. The insurance would compensate the consumer should property damage occur due to the negligence of the contactor. The insurance also protects the consumer from being liable if a worker should sustain an injury while working on the consumer’s property.

When looking to hire local plumbing or HVAC contractors in Grand Rapids, MN, don’t be tempted to hire a contractor that is not licensed, bonded and insured—even if it may cost less. Hiring a contractor that is not licensed, bonded and insured can put you at serious risk and actually cost you thousands more in the long run. Get in touch with Rapids Plumbing & Heating Inc. today to speak with a member of our highly qualified team.

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