Licensed, insured, bonded: what a Toronto contractor can actually prove

"Licensed, insured and bonded" is lettered on a lot of trucks in Toronto. The three words point to separate things from separate issuers, and only some of them apply to a house renovation. A licensed, insured, bonded contractor should be able to hand you a document for each word, and most of those documents can be checked by anyone, free, in a few minutes.

This guide takes the words one at a time: what each should mean for a renovation in Toronto and the GTA, which paper stands behind it, and where you look it up before you sign.

What does each word mean on a renovation in Toronto?

Licensed means a public body has given the business, or one trade inside the job, permission to do that work. Insured covers two different things: liability insurance bought from an insurer, and workplace coverage for the crew through the WSIB. Bonded means a surety company has put its own money behind one named contract.

Five rows, four issuers. That is why the phrase on the truck settles nothing by itself: you need to know which of the five the contractor is talking about.

Does a renovation contractor need a licence in Toronto?

Inside the city, yes. The City of Toronto requires a building renovator licence from every business that repairs or renovates buildings, and from any business that advertises renovation services. Some trades inside the job carry a licence of their own from a provincial body, and the electrical one is the easiest for a homeowner to look up.

The City's building renovator licence

The City's building renovator page lists what an applicant hands in, including a criminal record check, and says the tradesperson has to pass a trade examination. The licence expires every year on the anniversary of the day it was first issued, and one that is not renewed on time is cancelled. A number that was good when the van was lettered may have lapsed since.

Ask for the licence number and type it into the City's Business Licence Lookup, which also searches by business name. This licence is Toronto's. If your house is in Vaughan, Markham, Richmond Hill or Mississauga, ask that municipality's licensing office what it requires of a renovator working there.

The trades inside the job

A general contractor brings in other trades, and "licensed" has to hold for them too. The Electrical Safety Authority's advice is to hire a Licensed Electrical Contractor for any electrical work in a home. Its licence number, written ECRA/ESA, belongs on the electrician's truck, business card and estimate, and ESA's Find a Contractor tool confirms it. When the work is finished, the electrical contractor can give you a Certificate of Acceptance from ESA. Keep it with the house papers.

When a general contractor runs the project, ESA tells homeowners to make sure the electrician that contractor brings is licensed this way. So ask your contractor for the electrical contractor's name and number as well as their own. On our projects the electrical work goes to a Licensed Electrical Contractor and gas work to a TSSA-registered fuel contractor, as set out on our general contracting page.

What does WSIB coverage prove?

A WSIB clearance shows that a business is registered with Ontario's Workplace Safety and Insurance Board and is up to date with its premiums and reporting. It concerns the people who work in your house, and it is separate from liability insurance. Ontario's guide to starting a home renovation says the workers need this coverage, with some exceptions, and tells you to check with the WSIB.

What a clearance is

A number the WSIB issues to a registered business. It lives in the WSIB's system, so it does not depend on a sheet of paper the contractor shows you.

How long it lasts

Up to 90 days from the date of issue. Most clearances expire on the 20th of February, May, August and November, so one printed in spring says nothing about a job in the fall.

How you check it

The WSIB's clearance questions and answers explain that a certificate number can be verified through its online services, and that a business can be found by name, phone number, address, city or postal code.

Whether you are required to get one

The same WSIB page says a clearance certificate is not required when the contractor is hired for home repairs or renovations by the home's resident. The check is still worth two minutes, because it shows whether the business is registered at all.

What should a liability insurance certificate show?

Liability insurance is what pays when the contractor's work damages your house, a neighbour's property or a condo building, or injures someone who is not on the crew. The certificate is a one-page summary written by the insurer or broker. Read it for these six things before you file it away.

• The insured name is the same business that is named on your contract and on the City licence.
• The policy dates run past the end of your job, and do not stop in the middle of it.
• The description of operations matches the work you are hiring for. If it is vague, ask the broker whether renovation work like yours is covered.
• A broker or insurer is named, with a phone number or email you can use.
• The certificate was issued recently. An old one can describe a policy that has since been cancelled.
• In a condo, it shows what the corporation asks for. Boards usually want the contractor's certificate before work starts, as our guide to condo renovation rules explains.

A certificate is a snapshot of one day. A short email to the broker named on it, asking them to confirm the policy is in force, turns it into something you can rely on. Before a large renovation, also tell your own home insurer what is planned and ask what it wants to see from the contractor.

What does "bonded" mean, and does it cover your job?

A bond is a written promise from a third company, the surety, to cover the owner's loss if the contractor does not do what the contract says. It is written for a named contract and a named owner. A contractor who is bonded for someone else's project has given you nothing, so the word matters only if there is a bond with your job on it.

The Surety Association of Canada describes contract surety bonds as protection for the owner against financial loss when a contractor fails to fulfil the terms of the contract, and notes that bonds may be issued only by companies licensed to do so. If a contractor tells you they are bonded, one question sorts it out:

"Which surety wrote the bond, which contract does it name, and can I have a copy that shows my address?"

If the answer is a bond for the business in general, or a bond the contractor cannot produce, treat the word as lettering. If your project is large enough that you want one, raise it before the price is set, because the bond is arranged for that contract.

How do you check all of it in one evening?

Send one email asking for the numbers, then look each one up yourself. Every lookup below is free and none needs an account. Doing them in this order means the slowest reply, the broker's, is already on its way while you do the rest.

1. Ask the contractor for the legal business name, the City of Toronto licence number, a current WSIB clearance number, the liability insurance certificate, and the name and ECRA/ESA number of the electrical contractor they use.
2. Email the broker on the insurance certificate and ask them to confirm the policy is in force for the dates of your job.
3. Look up the City licence. The category should read building renovator and the licence should be current.
4. Verify the clearance number with the WSIB and note the date it expires.
5. Find the electrical contractor in ESA's tool.
6. Search the business name in Ontario's Consumer Beware List, which the province's renovation guide tells homeowners to check.
7. Compare the names. The licence, the clearance, the certificate and your contract should all show the same business.

A mismatch in step seven is the one worth a phone call. Often it is a trade name beside a numbered company, and the contractor can explain it in a sentence. If they cannot, you have learned something before any money moved.

What can the paperwork not tell you?

Whether the work will be good. A licence, a clearance and a certificate show that a business is allowed to work, has registered its crew and can pay for damage. They are silent on how a shower is waterproofed or how a change is handled in week three.

For that you need the other half of the checking: finished rooms you can look at, such as those in our project gallery, a scope you can read line by line (see how to tell a good contractor quote from a bad one), and a contract that says who is responsible for what (see what turnkey should mean). Where a permit is involved, our Toronto renovation permits guide covers who applies.

Art Style Construction takes on home renovations, kitchens and bathrooms across Toronto and the GTA. When you book an on-site consultation, bring the list from this guide and ask us for each item on it, the same as you would ask anyone else.