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Reality Check: Survey Reveals Serious Flaws in Homeowner Renovation Hiring Behaviour

due diligence 1

TrustedPros, Canada's most trusted peer-reviewed home improvement contractor platform, has discovered that nearly 70% of Canadian home improvement contractors say that their clientele does not do enough due diligence during the home renovation hiring process.

This information comes from a recent survey conducted by TrustedPros that polled 395 home renovation contractors across Canada. The survey has revealed other alarming information about the home renovation hiring process.

credential trends

A graph displaying how often Canadian contractors say that their clients ask to see their credentials (trade license, Workers' Compensation Insurance, and liability insurance). The 2017 survey reveals that 35% of contractors are asked about their credentials 5% of the time or less. Less than 5% of contractors who participated in the survey say that 100% of their clients ask to see their credentials.

An overwhelming number of contractors (74%) say that their clients do not ask to see their skilled trade license. Additionally, all of the respondents who complete commercial projects say that their commercial clientele ask to see their trade license between 95-100 per cent of the time. However, their residential clients ask for this information zero per cent of the time.

A large majority of contractors (71.4%) say that their clients do not ask to see their municipal business license before doing business with them.

Despite this, 68.1 per cent of Canadian contractors say that their clients ask to see their liability insurance more often than anything else. In addition, 59 per cent of the respondents say that their clients ask to see their Worker's Compensation Insurance (WCI).

Home improvement professionals say that their clients hardly mention that they have verified their contractor's WCI, liability insurance, trade license, or business license with the appropriate regulatory body.

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The survey reveals that homeowners are asking to see their contractor's insurance credentials more often than other important credentials.

Homeowners may believe that a contractor's insurance coverage will reduce their own responsibility for home renovation errors and injuries. However, homeowners may not realize that hiring unqualified tradespeople who have defaulted insurance policies could result in serious problems down the line. Homeowners could experience issues with insurance claims, home sales, and overall safety.

Information collected from this survey has lead the TrustedPros Team to believe that Canadian homeowners are not successful with their home improvement due diligence.

About the Survey

We reached out to our contractor community over a four-week period to obtain submissions. Respondents represent each Canadian province and a robust variety of skilled trades in the home renovation industry.

infographic of survey participants

The survey remained anonymous to encourage honest participation.

We received 395 submissions. Statistics Canada has documented 213,534 specified trades contractor businesses in Canada as of 2016. The number of businesses and survey submissions creates a 95% sample confidence level.

We asked contractors to complete this survey as they service numerous clients annually. Contractors can provide a robust perspective on consumer behaviour in Canada.

We've simplified provincial Workers' Compensation Insurance home renovation rules so you don't have to. Click for more information.

Respondents represent various skilled trades categories. Some skilled trades do not require licenses and some businesses do not require WCI coverage. Since rules and regulations vary across Canada we have published the results as they have been collected.

Unsure about what license your contractor needs? Find out what your provincial trade license regulations are here.

Survey Results

Do homeowners do enough research before they hire a skilled professional?

do contractors do enough due diligence

We asked Canadian contractors if they think that homeowners do enough research and due diligence prior to hiring a skilled trades professional. A strong majority (69.6%) of Contractors say that homeowners do not do enough research, and 30.4% say that they do.

Due diligence and research criteria includes (but is not limited to):

In a perfect world, homeowners can hire any skilled tradesperson to complete a home renovation.

Unfortunately, we don't live in a perfect world. Some contractors choose not to have certifications or insurance. This can be illegal depending on where the contractor is working.

It may be burdensome to vet a contractor, but it is a necessity. Homeowners should not trust a contractor who claims to have all of their credentials—even contractors agree!

Homeowners need to rely on themselves and their own research before they hire a skilled professional.

At the end of the day, good and honest contractors want homeowners to be diligent. This benefits both parties.

We asked contractors to provide additional feedback and tips on how homeowners can practice better due diligence. Here's what they said:

“Homeowners should start a simple Google search on the contractor's company to begin the selection process.”

--B.C. Renovation Specialist

“Complete a lot of in depth research on the trades that you need to hire. Explore liabilities that come along with completing the specific home renovation. Look into what insurance coverage is required to protect your assets. Find out if the project requires a permit and trades licenses to complete it. Only place your trust in yourself and choose the contractor who can meet your standards.”

--Ontario Home Addition and Renovation Specialist

image of contractor saying stop using classified ads to find contractors

“Homeowners need to realize that unlicensed, under the table tradespeople are completing a criminal offense…This should be one more reason for homeowners to vet their contractors before hiring them”

--Ontario Electrical Contractor

“Ask to see the contractor's portfolio (photos, previous project details, references, TrustScore, and reviews) on top of their certifications and credentials. From my experience, diplomas, licenses, and certificates are not enough to prove that a contractor does a good job and provides good customer service.”

--Alberta Carpenter

image of contractor saying ask about credentials upon arrival

“Homeowners need to understand that trade work is EXPENSIVE, just like other professional services. The material costs are equal to (or more than) dental work or an accountant's annual fees. A homeowner should invest as much time, concern, and effort as they do with any other high-risk professional's service.”

--B.C. Plumbing, Electrical, Gas Fitting and Renovation Contractor

“Look deeper into who wrote the contractor's client reviews. You should follow up with the authors, and see the contractor's work in person for yourself.”

--Alberta Mover

image of contractor saying to ask about your contractor's team

STOP hiring the cheapest contractors you can find! In order for a contractor to be qualified they need to go to trades school. It takes time and money to educate a tradesperson! For example, most Red Seal Trades take 4 years or more to complete. Factor this in when you are considering your home renovation or improvement budget.”

--B.C. Gas Fitting, Electrical, and Plumbing Contractor

“A good contractor needs to have all of their paperwork in order. They need to hire a good accountant/legal team/marketer/administrative team. It costs them a lot of money to have liability insurance, a license, WCI, payroll, heavy tools and equipment, work vehicles, materials, cell phones, project management software, and bid software… The list goes on and on and it increases overhead costs!

It is almost impossible for a legitimate tradesperson to charge their clients $30 - $40 an hour and still be able to make enough money to live on. Remember this when you go to hire your contractor.”

--B.C. Renovation Specialist

image of contractor saying ask about BCIN Number

“Quebec homeowners must check that their contractor is holding an RBQ license as well as liability insurance. The former is mandatory for the contractor to have while the latter is not. Nevertheless, they are both a necessity!”

--Quebec General Contractor

Please do not accept a brief email from a contractor as your sole source of security for an entire reno project. You need to meet with the contractor and get a full quote (including materials, timeline, and their qualifications) before you even consider hiring them!”

--Ontario Home Renovation Specialist

Contractors and Trade Licenses

graph of statistics: do clients ask to see trade license

Only 14 per cent of respondents report that their clients ask to see their trade license. It is mandatory for these individuals to have a license for their trade in their province.

This could mean that a small number of homeowners know about the mandatory trade licencse policy in their province. It could also be a coincidence that these homeowners ask to see their contractor's license.

What's the harm in hiring a contractor under the table for cash? A lot, actually. Find out more.

Almost 12 per cent of contractors say that their clients ask to see their trade license (and they do not work in a compulsory trade). This could mean that these clients are not familiar with the license regulations in their province, but remain diligent during their hiring process.

Over 77 per cent of contractors say that their clients are not asking to see their trade license. Of them, roughly 20 per cent of contractors say that their clients do not ask for their trade license even though they must be certified by law in their province.

Over 50 per cent of contractors (53%) say that their clients do not ask to see their trade license, but they don't work in a compulsory trade in their province.

This could mean that a strong majority of homeowners do not know that some contractors must have a license to legally work in Canada. However, it does indicate that homeowners are not asking their contractors for their trade license as a precautionary measure.

We suggest that homeowners always ask to see their contractor's license, and verify the license with the corresponding regulatory body.

graph of statistics: do homeowners confirm they check license

Contractors report that very few homeowners (8.1%) tell them that they have verified their trade license. Meanwhile, over 40 per cent of contractors say that their clients never mention that they have vetted their trade license credentials.

It is not necessary for a homeowner to tell their contractor that they have vetted their trade license.

However, this data may reveal that a large percentage of contractor's credentials remain unchecked by clientele.

Why should you ask to see your contractor's trade license?

It's very important to ask your contractor about their skilled trades license. Rules vary between provinces, but certain tradespeople must have a license to legally work in Canada.

trade license chart

A diagram displaying which trade licenses are required across Canada, and which are not. Find the full version here.

Why should you hire a licensed contractor?

  • Insurance companies may not honour a home renovation disaster if the work was completed by an unlicensed skilled tradesperson.
  • Trade governing bodies monitor and penalize licensed tradespeople if they provide poor service or craftsmanship.
  • Apprentices learn standardized rules and regulations. They are tested on their knowledge of the trade and industry code.
  • Some cities may not allow an unlicensed tradesperson to pull a permit for a renovation. If the renovation is completed without a permit, then the homeowner may experience serious issues down the line.
  • Unlicensed contractors may be more likely to complete shoddy work, which can cost thousands of dollars to fix, and put your life in danger.
  • You could be liable for an issue if you decide to sue your contractor in court.

How to ensure that your contractor is licensed accordingly:

Contractors and Business Licenses

image of graph: statistics about clients asking to see business license

Over 71 per cent of contractors say that their clients do not ask to see their municipal business license, and roughly 28 per cent say that their clients ask to see this credential.

image of graph: statistics of clients verifying contractor's business license

A small percentage of contractors (13.9%) say that their clients told them that they have verified their business license. However, 86 per cent of contractors say that their clients have not done this.

Business license regulations vary depending on geographical location. A business license allows the proprietor to legally operate their business in their city.

Municipalities may fine or shut down a business that is not licensed or up to code. Regulations differ according to business structure (individuals, corporations, or partnerships) and municipality.

For example, the city of Toronto requires building repairs or renovation specialists to obtain a renovator's license. They must have this to work in the city.

Why should you hire a business that has a municipal license?

  • Doing business with someone who is willing to break the law could mean trouble down the line. It may indicate a lack of business honesty and transparency.
  • Working with a licensed business may help you keep track of their company history, which could be useful in the event of a law suit.
  • Some municipalities require business owners to complete a bylaw examination. These individuals may have a better understanding of city rules. They could be at lower risk for a city inspector citation or a project halt.

How to check your contractor's municipal business license:

  1. Ask your contractor for their municipal business license.
  2. Call your municipal business registration office and confirm the license number with them.

Contractors and Insurance

Liability insurance

image of graph: statistics: do clients ask to see liability insurance

liability insurance by province graph

The graph above illustrates that Saskatchewan contractors are asked about their liability insurance least often (36.3% say they are not asked about their liability insurance coverage). Meanwhile, Quebec contractors report that they are asked about their liability insurance more than any other province (88% say that they are asked about their coverage).

Contractors report that their clients ask to see their liability insurance more frequently than any other credentials. A large majority (68.1%) of contractors report that their clients ask them for this information and 29 per cent say that their clients do not.

This data suggests that homeowners are concerned about their contractor's liability insurance.

Homeowners should note that it is not enough to ask about their contractor's liability insurance. Homeowners must verify that the insurance policy is valid as well.

Contractors say that their clients do not mention that they have verified their insurance policies.

image of graph: statistics: do homeowners verified contractor's insurance

Homeowners must contact their contractor's insurance company, verify that the contractor's policy is valid, and check if it covers the scope of their renovation project.

Liability insurance helps contractors cover their losses in the event of an immediate accident or a future problem.

Why should you hire a contractor who has liability insurance?

  • Liability insurance may indicate that the contractor will responsibly cover functional/structural issues with the home renovation during or after the renovation is complete. This offers homeowners some security and peace of mind.
  • If your contractor is not insured then you may have to pay out of your pocket to fix damages and structural mistakes that they make.

How to check your contractor's liability insurance:

  1. Ask to see your contractor's current certificate of liability insurance.
  2. Call their insurer and verify that the certificate number is indeed valid and current.
  3. Ask additional questions about the contractor's plan and if can cover your project.

Workers' Compensation Insurance

image of graph: statistics of homeowners asking to see contractor's WCIWCI breakdown province by province chart

The graph above illustrates that Quebec contractors are asked about their WCI least often in Canada (63% say that their clients do not ask about their WCI coverage). Meanwhile, B.C. contractors report that they are asked about their WCI insurance more than any other province (78% say that their clients ask about their coverage).

Over half of Canadian contractors (59%) report that their clients ask to see their WCI coverage, which means that 41 per cent of contractors say that their clients do not ask about their WCI.

As with liability insurance, it's important for homeowners to ask their contractors about this credential. It is very important for homeowners to verify that their contractor is in good standing with the provincial Workers' Compensation Board (WCB).

The graph below displays that over 70 percent of homeowners do not tell their contractors that they have verified their WCI with the provincial WCB. This could mean that homeowners are not checking if their contractors are in good standing.

image of graph: statistics of homeowners verifying contractor's WCI

WCI helps a business owner cover costly medical bills and unemployment salary in the event of an employee injury on the job. WCI regulations vary based on the province, business, and size. It's very important to hire a contractor who has WCI coverage when it is mandatory for them to have it.

Why should you hire a WCI contractor?

  • A homeowner could be responsible to pay for a tradesperson's medical bills and unemployment salary if they get injured on the job site.

How to check your contractor's liability insurance:

  1. Understand your provincial WCI regulations by reading this article.
  2. Ask your contractor for their WCI number and contact your provincial WCB.
  3. Check the number with the board and ask for a letter of clearance.
  4. Do not hire a contractor who does not have WCI (if it is compulsory) or cannot attain a clearance letter. You may be responsible for their unpaid premiums.

Measuring Specific Trades

Survey respondents represent each province as well as various skilled trades categories. The data in the graphs below may help readers gauge how much due diligence Canadians are doing for the following home renovation categories.

Our survey has revealed the following:

Tradespeople who are asked the least about their trade licenses:

  1. 100% of Roofers say that their clients do not ask them for their trade license
  2. 84% of Painters say that their clients do not ask them for their trade license
  3. 80% of Flooring Specialists say that their clients do not ask them for their trade license
  4. 74% of Home Renovators say that their clients do not ask them for their trade license

Tradespeople who are asked the most about their trade licenses:

  1. 46% of Plumbers say that their clients ask to see their trade license
  2. 42% of HVAC Specialists say that their clients ask to see their trade license
  3. 44% of Tiling Specialists say that their clients ask to see their trade license
  4. 40% of Electricians say that their clients ask to see their trade license

Tradespeople who are asked the least about their WCI:

  1. 51% of General Contractors say that their clients do not ask them for their WCI
  2. 47% of HVAC Specialists say that their clients do not ask them for their WCI
  3. 47% of Drywall Specialists say that their clients do not ask them for their WCI
  4. 43% Carpenters say that their clients do not ask them for their WCI

Tradespeople who are asked the most about their WCI:

  1. 80% of Plumbers say that their clients ask to see their WCI
  2. 80% of Flooring Specialists say that their clients ask to see their WCI
  3. 78% of Roofers say that their clients ask to see their WCI
  4. 72% of Renovators say that their clients ask to see their WCI

Tradespeople who are asked the least about their liability insurance:

  1. 53% of Electricians say that their clients do not ask to see their liability insurance
  2. 53% of HVAC Specialists say that their clients do not ask to see their liability insurance
  3. 42% of Drywall Specialists say that their clients do not ask to see their liability insurance
  4. 39% of General Contractors say that their clients do not ask to see their liability insurance

Tradespeople who are asked the most about their liability insurance:

  1. 88% of Plumbers say that their clients ask to see their liability insurance
  2. 75% of Construction Specialists say that their clients ask to see their liability insurance
  3. 75% of Flooring Specialists say that their clients ask to see their liability insurance
  4. 74% of Carpenters say that their clients ask to see their liability insurance

Readers should note that some trades listed in the graphs below may not be considered mandatory trades (require licenses) in some provinces. The trades represented in the graphs were chosen based on respondent sample sizes.

chart of how often homeowners ask to see WCI, liability, and license chart for electricians

chart of how often homeowners ask to see WCI, liability, and license chart for plumbers

chart of how often homeowners ask to see WCI, liability, and license chart for HVAC specialists

chart of how often homeowners ask to see WCI, liability, and license chart for construction specialits

chart of how often homeowners ask to see WCI, liability, and license chart for renovators

chart of how often homeowners ask to see WCI, liability, and license chart for general contractors

chart of how often homeowners ask to see WCI, liability, and license chart for roofers

chart of how often homeowners ask to see WCI, liability, and license chart for carpenters

chart of how often homeowners ask to see WCI, liability, and license chart for painters

chart of how often homeowners ask to see WCI, liability, and license chart for flooring specialists

chart of how often homeowners ask to see WCI, liability, and license chart for tiling specialists

chart of how often homeowners ask to see WCI, liability, and license chart for drywall specialists

Additional Information: Provincial Trends

Canadian contractors report different levels of client due diligence in each province.

The information below may help homeowners and trade regulation bodies across Canada recognize where due diligence improvements (extra research during the hiring process and information proliferation) could be made.

Alberta

  • Alberta contractors reported the lowest number of clients who never ask to see their credentials (13% of contractors).
  • Most respondents report that 1-5% of their clients ask to see their credentials.

British Columbia

  • 2% of B.C. contractors say that their clients ask to see their credentials 100% of the time. Other than Ontario, no other contractors reported numbers this high.
  • Only 15% of respondents report that their clients ask to see their credentials 50% of the time or more. This means that B.C. contractors are asked to show their credentials second most in Canada (second to Quebec).
  • Most contractors report that 1-5% of their clients ask to see their credentials.

Manitoba

  • All respondents have had no more than 50% of their clientele ask to see their trade credentials.
  • Most contractors report that 1-5% of their clients ask to see their credentials.

Atlantic Canada

  • All respondents have had no more than 50% of their clientele ask to see their trade credentials.
  • Zero Atlantic Canadian respondents said that their clients never ask to see their credentials.
  • Nearly half of contractors report that 1-5% of their clients ask to see their credentials. Nearly half of the other respondents report that 6-10% of their clients ask to see their credentials.

Ontario

  • 2% of Ontario contractors say that 100 per cent of their clients ask to see their credentials. Other than B.C., no other contractors reported numbers this high.
  • 27% of Ontario contractors say that none of their clients ask them to present their credentials. Ontario contractors are asked to show their credentials the second least in Canada (Saskatchewan takes the lead).
  • Most contractors report that 1-5% of their clients ask to see their credentials.

Quebec

By law, all Quebec Plumbers, Electricians, General Contractors, Bricklayers, Gasfitters, Oil Burner Mechanics, Refrigeration/HVAC Specialists, and Tile Setters must have a Certificate of Qualification through the RBQ and CCMTQ. They must display their certifications and licenses on all of their advertisements.

Homeowners may be more aware of trade credential regulations because the Quebec government has strict skilled trades regulations. This may explain why all Quebec contractors report that their clients have asked to see their credentials, and that Quebec contractors report that they have more diligent clientele than any other Canadian contractors.

We believe that these regulations should encourage other provincial trades and insurance boards to tighten their regulations. It could raise consumer awareness within the skilled trades industry and improve the local business and consumer experience.

  • One quarter of Quebec contractors say that their clients ask to see their trade credentials about 71 – 80% of the time (at most). Quebec contractors are asked to show their credentials the most out of any Canadian province.
  • Half of Quebec respondents say that their clients ask to see their credentials between 1 - 5% of the time. Quebec had the highest volume of contractors report this in all of Canada.
  • Zero Quebec respondents said that their clients never ask to see their credentials.

Saskatchewan

  • All respondents have had no more than 50% of their clientele ask to see their trade credentials.
  • 42% of respondents say that none of their clients ask to see their credentials. Saskatchewan contractors are asked to show their credentials the least in all of Canada.

Summary

Home renovation scams occur when fraudsters are enabled by unsuspecting homeowners. The best way to prevent a home reno scam is to avoid hiring fraud contractors. However, it isn't easy to differentiate a good contractor from a bad one without doing background research.

This is why due diligence is important.

We asked contractors across Canada to tell us about their clients' hiring habits.

Contractors report that their clients are not asking them about their trade licenses. This stands true for skilled tradespeople who perform compulsory trades (trades that require a license to work in a province), as well as tradespeople who work in voluntary trades.

The good news is that homeowners are asking to see their contractors' liability insurance and Worker's Compensation Insurance. The bad news is that contractors say that their clients hardly ever mention that they vetted this information.

In fact, a large majority of contractors do not think that their clients are doing enough research during the hiring process. This is problematic.

Everybody benefits when clients are diligent about the contractor hiring process. Reputable contractors are employed instead of fraudsters and homeowners end up with sound tradespeople to complete their remodelling project.

Our team believes that the data collected from this survey can help honest tradespeople work hard to educate their clients about due diligence. We also think that the information in this article can help homeowners take advantage of existing consumer awareness resources that are provided by provincial trades, licensing, and insurance boards. We believe that this data should encourage homeowners to work hard on their own to hire skilled tradespeople responsibly.

Posted by: Nicole Silver
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