Every contractor ad in NJ says "licensed, insured, and bonded." But most homeowners have no idea what these words mean — or how to verify them. Here's the plain-English breakdown.
What "Licensed" Actually Means
A license means the contractor passed a state-administered test proving they know how to do the work safely and to code. Licensing requirements vary by trade and state.
- •NJ requires licenses for: plumbers, electricians, HVAC techs, home improvement contractors (HIC)
- •A Home Improvement Contractor (HIC) license is required for most renovation work in NJ
- •You can verify a license at the NJ Division of Consumer Affairs website (use their license lookup tool)
- •Unlicensed work can void your homeowner's insurance and cause issues during home sales
What "Insured" Actually Means
Insurance protects you if something goes wrong. There are two types to ask about:
- •General Liability Insurance: Covers property damage the contractor causes (e.g., they crack a pipe and flood your basement)
- •Workers' Compensation Insurance: Covers the contractor's employees if they get injured on your property — without it, YOU could be sued
📋 Always ask for a Certificate of Insurance (COI) — a one-page document your insurance agent can verify. A verbal "yes I have insurance" is not enough.
What "Bonded" Actually Means
Bonding is less critical than licensing and insurance, but still meaningful. A surety bond is a financial guarantee that the contractor will complete the job or the bonding company will pay you. It's essentially a form of consumer protection.
- •Most relevant for large projects ($10,000+)
- •Provides recourse if a contractor takes your deposit and disappears
- •Required for many commercial contracts and government jobs
Quick Verification Checklist
- 1Ask for their NJ HIC or trade license number and verify at njconsumeraffairs.gov
- 2Request a Certificate of Insurance — general liability + workers' comp
- 3Search for reviews on Google and the Better Business Bureau
- 4Never pay more than 30% upfront for any project
- 5Use escrow payment so funds are protected until work is complete
🛡️ On Gygnus, every provider completes identity verification including government ID and live selfie verification. You can see their verified status badge before hiring.
