Living Smart: Are you a savvy consumer? Take this quiz

McClatchy-Tribune Information Services

Are you a confident consumer, or do you have much learn about the art of hiring smart?

Answer these five questions, and no matter how you score, youíll feel better about picking a contractor for your next big project. Look for answers at the end.

1. When doing research before hiring, which action is most savvy?

a. Asking a contractor for three to five references.

b. Asking a contractor for his or her three to five most recent clients.

2. Which of these attitudes should prompt you to move on to another prospective contractor?

a. "Am I licensed? Nah; thatís just a regulatory hassle."

b. "Insurance? That would just make me more expensive."

c. "Skip the permit. No one will ever know."

d. All of the above.

3. When checking that a contractor is properly insured for liability, which action is most savvy?

a. Asking the contractor for a certificate of insurance.

b. Getting an insurance certificate and calling the insurer to confirm active coverage.

c. Confirming coverage directly with the insurer and then getting named as an "additional insured" on the contractorís general liability policy.

4. Which statement is NOT an accurate description of a contractor surety bond?

a. An agreement among the customer, the contractor and the agent that issues the bond, usually an insurance company.

b. A marketable, fixed-interest government debt security with a specified maturity date.

c. A way to guarantee that the customer can be compensated if the contractor fails to perform the services outlined in the contract.

d. A way to protect homeowners from shoddy work, project abandonment, property damage and any unpaid supply or labor charges.

5. Which contract type is likely to be better for the average homeowner?

a. Fixed-price

b. Time and materials

ANSWERS:

1. b: Be sure your contractor has earned referrals, especially on recent jobs, since work quality can change over time. Online reviews on a trusted site are a great info source, but consider the added step of contacting references and asking detailed questions.

2. d: Beware of a contractor who downplays the importance of covering your legal bases. Find out what, if any, trade licenses are required where you live. Make sure your contractor carries liability and workersí compensation insurance coverage. Check local permitting requirements. This is particularly important if youíre making any plumbing, electrical or mechanical changes to your home, or planning renovations, additions or contract work that may change your homeís structure.

3. c. While itís smart to ask to see a contractorís certificates of insurance, itís an even better practice ó because paperwork can be faked or altered ó to contact insurers to confirm coverage. Top-rated insurance providers recommend yet another step: having yourself named as an "additional insured" on the contractorís general liability policy. This ensures youíre covered against other potential liability, such as a worker breaking a pipe that causes a neighborís yard to flood. Coverage may cost little or nothing, plus youíll be alerted if the contractorís policy lapses.

4. b. Smart consumers know that a contractorís bond can protect them in a variety of ways. Also, many states require that contractors be bonded in order to get a license. To determine if a contractor is bonded, ask for a bond number and certification. Take care that the bond and license are up to date.

5. a: A fixed-price contract is the most common type of home remodeling contract, and the type most consumers should demand from a general contractor. A fixed-price contract spells out precisely what a project will cost, including all permits, building materials and labor. It locks in the overall cost, preventing the general contractor from raising the price once all parties sign off.

A time and materials contract bills you by the hour for labor and materials. Some homeowners incorrectly assume this will save them time and money. In reality, itís like handing the general contractor a blank check, because the homeowner will pay extra costs that arise. An unscrupulous contractor has less incentive to finish in a timely manner. In fact, in California, time and material contracts arenít legal for home improvement work