After your property is damaged — whether from a windstorm, hail, fire, or water — the pressure to get it fixed quickly is real. Contractors know this, and not all of them operate honestly. Choosing the wrong one can mean subpar repairs, out-of-pocket costs your insurer won't cover, legal problems from an assignment of benefits you didn't fully understand, or simply work that fails inspection.
This guide walks you through every step of selecting a qualified contractor for insurance repair work: what credentials to verify, what red flags to recognize before you're committed, which questions will reveal how a contractor actually operates, and how to read a contract before you sign it.
If you've already filed your claim, you may also find our guide on how to file a property damage insurance claim useful for understanding where contractor selection fits in the overall process.
1. What Credentials to Check
Before you spend any time talking scope or price with a contractor, confirm they have the credentials the job requires. This takes less than ten minutes and filters out a significant portion of bad actors.
State Contractor's License
Most states require contractors to hold a current license for the specific trade they're performing — roofing, general contracting, electrical, plumbing, HVAC, and so on. A license confirms the contractor has met minimum competency and legal requirements to work in your state.
How to verify: Search your state's contractor licensing board website by the contractor's full legal business name or their license number. The record should show the license is active (not expired, suspended, or revoked), the license type matches the work you need, and the business entity name matches what's on the contractor's estimate or business card.
If a contractor tells you they're "exempt" from licensing in your state, verify that claim independently on the licensing board's website before taking them at their word.
General Liability Insurance
General liability insurance covers damage the contractor causes to your property while working. Without it, if a crew member drops a ladder through your skylight or causes a water leak that ruins your flooring, you may have no recourse beyond small claims court against an entity with no assets.
Standard minimum: $1 million per occurrence, $2 million aggregate. For large or complex projects, ask for higher limits. Request a Certificate of Insurance (COI) — not just a verbal assurance — and see Section 2 for how to verify it.
Workers' Compensation Insurance
Workers' compensation covers the contractor's employees if they're injured on your property. Without it, an injured worker may have the legal right to sue you as the property owner. Workers' comp is legally required in most states for any employer with one or more employees, but enforcement varies widely.
The COI should show a separate workers' compensation policy, not just general liability. Sole proprietors with no employees may be legitimately exempt — your state's workers' comp board can confirm exemption status for a specific contractor if needed.
Business Registration
A licensed, insured contractor should also be a registered business entity — sole proprietorship, LLC, or corporation — in your state. Check your state secretary of state's business registry to confirm the entity is active. A contractor operating under an unregistered business name is a warning sign.
- License number confirmed active on state licensing board
- Certificate of Insurance in hand (general liability + workers' comp)
- Business entity confirmed active on state business registry
- Physical business address (not a PO Box or personal address)
2. Verifying Insurance and Licensing
Credentials can be faked. A Certificate of Insurance can be forged or based on a cancelled policy. This section covers how to verify that what a contractor hands you is actually real.
How to Verify a License
Go directly to your state's contractor licensing board website — don't rely on a search engine result that might lead you to a third-party aggregator. Look up the contractor by license number (most accurate) or business name. Confirm:
- Status shows "active" or "current" — not expired, suspended, or revoked
- The license type matches the trade (roofing license for roofing work, general contractor license if managing multiple trades)
- The name on the license matches the name on the estimate and contract
- The license covers your county or municipality (some licenses are local, not statewide)
How to Verify a Certificate of Insurance
Request a Certificate of Insurance (COI) made out to you as the certificate holder — not a generic "to whom it may concern" version. The COI lists the insurer, policy numbers, coverage amounts, and expiration dates.
Once you have the COI:
Call the insurer directly
Call the insurance company listed on the COI — using the number from the insurer's official website, not the number printed on the document — and ask them to confirm the policy is active and in good standing for the contractor's business name. This takes about five minutes and is the only way to verify the COI hasn't been fabricated or issued on a policy that was subsequently cancelled.
Check the policy expiration dates
The policy must be active on the day work begins and throughout the project. If a policy expires mid-project, request a renewal COI before work continues.
Confirm coverage limits
General liability should show at least $1 million per occurrence. Workers' compensation should show a policy number (not "not applicable" unless you've independently confirmed the contractor is a sole proprietor exempt under your state's law).
3. Red Flags to Watch For
Unscrupulous contractors are more common after widespread weather events, but they operate year-round and target all types of insurance repairs — not just storm damage. Here are the most common warning signs.
- Asks you to sign an Assignment of Benefits (AOB) — this transfers your insurance claim rights to them, removing you from your own claim
- Offers to waive your deductible — illegal in most states and often a sign of inflated billing
- Demands a large upfront cash payment before any work begins
- Pressures you to sign immediately or claims the offer expires today
- Cannot provide a physical business address (PO Boxes don't count)
- Refuses to pull required permits or tells you permits aren't necessary
- Quotes by the job only, with no itemized breakdown of labor and materials
The Assignment of Benefits Problem
AOB arrangements are worth understanding in detail because they are presented by some contractors as a convenience — "so you don't have to deal with the insurer." In practice, signing an AOB gives the contractor the right to negotiate and collect your insurance settlement directly, pursue litigation against your insurer in your name, and potentially lien your property if a billing dispute emerges.
In states where AOB abuse became widespread (Florida being the most documented case), it contributed to dramatically increased insurance premiums for all homeowners. Multiple states have passed AOB reform laws limiting or prohibiting the practice. Regardless of legality in your state, you should consult with your insurer and possibly an attorney before signing any AOB.
Deductible Waiver Fraud
Your deductible is contractually required by your policy. A contractor who offers to cover or waive it is typically doing so by inflating the claim amount submitted to your insurer — which is insurance fraud. If discovered, your insurer can deny the claim, cancel your policy, or refer the matter for prosecution. The risk falls on you as the policyholder, not just the contractor.
Permit Avoidance
Most structural, electrical, plumbing, and HVAC repairs require permits. Permits ensure the work is inspected to code. A contractor who won't pull permits is either unlicensed, cutting scope on the work, or avoiding inspection of deficient prior work. Unpermitted work can complicate future sales of your home and may void your homeowner's insurance coverage for related losses.
4. Questions to Ask Before You Hire
A well-qualified contractor will answer these questions readily and specifically. Evasiveness or impatience with credential questions is itself meaningful information.
"Can I have your license number and the name of your insurer?"
This is the first filter. Any legitimate contractor will hand these over without hesitation. A contractor who hedges, provides a license number for a different jurisdiction, or says they're "in the process of renewing" is telling you something important.
"Who will actually be doing the work — your employees or subcontractors?"
Many general contractors use subcontractors, which is normal. But if the job is subcontracted, confirm that the subcontractors are also licensed and insured. Ask for their license and COI as well, or ask the GC to confirm in writing that all subs are covered under the GC's policy.
"Have you done similar work in this area recently? Can you provide local references?"
Ask for three local references from comparable jobs — similar scope, similar construction type — completed within the last 12 months. Call the references. Ask them: Did the project finish on schedule? Did final costs match the estimate? Were there any inspection issues? Would you hire them again?
"Who pulls the permits, and will I receive copies of the inspection sign-offs?"
The contractor should pull the permits — not you. And you should receive paper or digital copies of all passed inspections before making final payment. This protects you if issues arise later.
"What is your payment schedule, and do you require a deposit?"
A reasonable deposit for a large project is typically 10–30% at contract signing, with progress payments tied to completion milestones, and a final payment held until work is complete and passes inspection. Be wary of contractors who demand 50% or more upfront, or who want full payment before work begins.
"What warranty do you provide on your workmanship, and do materials carry a manufacturer's warranty?"
Workmanship warranties of one to five years are standard depending on the trade. Get the warranty terms in writing in the contract — not just in the sales conversation. Understand the difference between the contractor's workmanship warranty and the manufacturer's material warranty, and confirm both are transferable if you sell the property.
"Have you worked on insurance repair jobs before, and are you familiar with my insurer's scope-of-loss format?"
Experience with insurance repair work specifically matters. Contractors who routinely work with insurance claims understand how to document scope, communicate with adjusters, and handle supplement requests if hidden damage is found once work begins. A contractor unfamiliar with insurance work can create billing mismatches that delay your claim or leave scope gaps you'll pay out of pocket.
5. Getting and Comparing Quotes
Never accept a single quote for insurance repair work. Multiple bids give you pricing context, reveal scope discrepancies, and document that you exercised reasonable care in the selection process — which can matter if your insurer questions costs later.
Get At Least Three Written Estimates
All estimates should be in writing and should itemize: materials (type, grade, quantity), labor, disposal/haul-away, permit costs, and any subcontracted scope. A one-line estimate ("Roof replacement — $12,000") is not sufficient for insurance repair work. You need enough detail to compare bids against each other and against your adjuster's scope of loss.
Compare Against Your Adjuster's Estimate
Your insurance adjuster wrote a scope of loss — an itemized list of what they've determined needs repair and what they're willing to pay. Before hiring a contractor, review that document line by line against the contractor bids. Look for:
- Scope gaps: Items the adjuster included that no contractor bid covers — these are items you may need to pay out of pocket, or supplement with your insurer
- Pricing discrepancies: Contractors quoting significantly more than the adjuster's line items — these may need to be supplemented or negotiated before the contractor begins work
- Upgrade costs: Code upgrades or material substitutions not covered in the original scope — confirm who pays for these before work starts
Our guide on filing a property damage insurance claim walks through the adjuster estimate process in detail, including how to handle scope disputes before hiring a contractor.
Otter Quotes and Competitive Bids
Otter Quotes is built around the principle that homeowners shouldn't have to track down and vet multiple contractors on their own after a loss. You describe your project, and contractors submit bids you can compare side by side. This gives you the multiple written estimates you need without the phone tag and scheduling delays of sourcing quotes individually. See how it works for the full process.
6. Reviewing the Contract Before You Sign
A contractor's proposal is not a contract until it's a signed, written agreement with specific terms. Here's what every insurance repair contract should contain — and what to refuse to sign.
What the Contract Must Include
- Full legal name and license number of the contracting entity
- Physical business address and contact information
- Detailed scope of work — materials, grade, quantity, and labor tasks, not vague summaries
- Estimated start date and substantial completion date, with provisions for delay
- Payment schedule tied to project milestones, not arbitrary dates
- Who is responsible for pulling permits
- Workmanship warranty terms in writing
- Dispute resolution process (arbitration clause terms, if any)
- Change order procedure — any scope changes must be in writing before work proceeds
What to Refuse to Sign
- Assigns your insurance benefits to the contractor (Assignment of Benefits / AOB)
- Authorizes the contractor to negotiate your claim directly with your insurer without your involvement
- Waives your right to dispute the final invoice
- Includes a clause where you accept that permits "are not required" for the described scope — verify this independently
- Has blank spaces in any material term — price, scope, dates
Change Orders
Hidden damage discovered once work begins is common in insurance repair jobs — water damage behind walls, rotten decking under shingles, deteriorated framing behind stucco. Legitimate contractors document discovered damage with photographs, provide a written change order describing the additional scope and cost, and wait for your signature before proceeding. Never allow a contractor to proceed with additional work based on a verbal agreement alone.
If discovered damage may be covered by your insurance, contact your insurer before authorizing the change order. Your adjuster can inspect the additional damage and issue a supplement if warranted.
7. How Otter Quotes Helps You Choose
Otter Quotes is a bid platform designed specifically for homeowners navigating property damage and insurance repair projects. The process is straightforward: you describe your project and upload your adjuster's estimate, and contractors in your area submit competitive written bids.
This solves the most common friction points in contractor selection:
- Multiple written bids, fast: Instead of calling contractors one by one and waiting for callbacks, you get competitive bids in one place without the scheduling overhead
- Adjuster estimate alignment: You can share your adjuster's scope with bidding contractors directly, so bids come back against the same scope — making comparisons meaningful
- Written, itemized proposals: The platform is built around written bids, not verbal estimates — giving you the documentation you need for both contractor selection and your insurer
Otter Quotes does not make the hiring decision for you — that remains yours. But it gives you the competitive bids and documentation to make that decision on solid footing. Learn more at how it works. If you have questions about a specific bid or want to understand your adjuster's estimate, our contractor FAQ covers common questions in detail.
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Get Bids on Your ProjectFrequently Asked Questions
How do I verify a contractor's license?
Every state maintains a public contractor licensing database. Search your state's contractor board website by business name or license number. The license should be active, match the trade you need, and list the correct business entity. Don't rely on the contractor to provide a screenshot — look it up yourself on the official state website.
What insurance should a contractor carry?
At minimum, look for general liability insurance (at least $1 million per occurrence) and workers' compensation. Request a Certificate of Insurance (COI) and call the insurance company directly to confirm the policy is active and hasn't been cancelled. The phone number should come from the insurer's official website, not the COI itself.
What is an Assignment of Benefits (AOB) and should I sign one?
An Assignment of Benefits (AOB) is a document that transfers your insurance claim rights to the contractor, allowing them to bill your insurer directly and pursue litigation in your name. In most cases, you should not sign an AOB — it removes you from your own claims process and can create serious legal and financial complications. Consult your insurer and, if needed, an attorney before signing any AOB.
How many quotes should I get for an insurance repair?
Get at least three written, itemized quotes. Multiple bids help you understand fair market pricing, identify unusually low bids (a frequent red flag), and give you leverage to negotiate scope gaps with your insurer. All bids should itemize materials, labor, and permit costs — not just a total job price.
Can my insurer tell me which contractor to use?
Your insurer may have a preferred contractor network, but in most states you have the right to choose your own licensed contractor. You are not required to use an insurer's preferred vendor. Confirm this with your specific policy documents, as some policies include provisions related to preferred vendors. If you choose your own contractor, ensure their bid aligns with your adjuster's scope before work begins to avoid payment disputes.
What are warning signs of a dishonest contractor?
Key red flags include: pressure to sign immediately, requests for large upfront cash payments, no physical business address, inability to provide verifiable credentials, asking you to sign an AOB, promising to waive your deductible (illegal in many states), quoting a total price with no itemized breakdown, and unwillingness to pull permits. Any single one of these warrants caution; multiple red flags together should cause you to walk away.
What should I do if a contractor finds additional damage during the repair?
Ask the contractor to stop work, document the discovered damage with photographs, and contact your insurer before authorizing any additional scope. Your adjuster can inspect the supplemental damage and issue additional coverage if it's covered under your policy. Never authorize additional work based on a verbal agreement — require a written change order with documented scope and pricing before work resumes.