We have all hired contractors to do work around our homes, some jobs big, some small. Did you ever think to ask them if they have insurance? Did you ever ask for proof of that insurance? It is second nature for contractors to provide proof of insurance for commercial work to general contractors or business owners, but for our personal homes most people never ask. So, what is the risk?
What if the contractor does damage to your home such as starts a fire? He is responsible but does he have insurance to pay for that damage? What if the contractor had an employee or day laborer to help him on the job and that person was injured. If the contractor does not have workers compensation coverage, that employee is looking to get reimbursed by someone, most likely from you as the property owner.
As a homeowner, you should always ask for proof of insurance coverage to protect you. The terminology to use to ask the contactor to provide you with a Certificate of Insurance, usually provided by his insurance agent or insurance company.
While utilizing a licensed, insured contractor usually cost more, you are properly protected. Keep in mind, if a contractor has no license, has no insurance and hires cheap unqualified help, what do you think the chances are that the job or work is going to be done to your total satisfaction? When something goes wrong, you are the one holding the bag.