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Licensed General Contractor - What it is and Why it Matters

If you're thinking of hiring a contractor to build you a new home, renovate existing properties, or do some residential remodeling it’s vital to check their credentials. We explain why it's so important to always work with a licensed contractor and what the risks are if you don't. Fortress Home is one of Chicago's top licensed general contractors and wants to make the process of hiring a contractor as simple and straightforward as possible, so you don't need to worry about your construction work.

Why do general contractors need a license?

As major construction projects can range from hundreds of thousands to millions of dollars and the general contractor is responsible for the overall project, it's very important that they are suitably qualified, experienced, and insured. In order to get a general contractors licence they need to submit proof of these things to their city or state licensing board.

Different states have different requirements to become licensed general contractors but there is a lot of overlap, especially with the general contracting licence, which usually has the most stringent requirements.

What about insurance?

A very important part of the licensing process is providing proof of insurance. As a customer, it's vital to know that your contractor is fully insured so that you won't be liable for any workplace injuries or accidents.

A general contractor will have both worker's compensation and general liability insurance for the whole site. This means that if your property gets damaged, or a worker gets injured on the project site, the insurance will cover these extra costs, and the general contractor will manage the issue.


Why work with a licensed general contractor?

While there are many types of licensed contractors, if you work with someone with a general contractors license they will ensure that all other contractors are sufficiently licensed so you don't have to worry about checking the specific license for multiple contractors.

What are the risks of working with an unlicensed contractor?

Working with an unlicensed contractor is a very risky proposition for the customer. Most of the risks are related to insurance and legal liability. These can include:

  • If there is a problem or delay on the site the customer will be responsible for it and is unlikely to have any legal recourse.
  • The customer is unlikely to have any legal rights if there are issues or problems with the contractor or their work.
  • Any on-site injuries or accidents will be the responsibility of the customer which could be extremely costly.
  • If the work is not up to code there is unlikely to be any legal recourse for the customer.

If you're working with a licenced general contractor, they are fully aware of all relevant building codes and will ensure you have the right permits so work will all be completed to code.

And even better - their insurance covers the whole site and they

are also responsible for making sure that all the other workers and subcontractors are sufficiently qualified and all work is completed to a high standard. This ensures that all warranties and guarantees for materials and appliances are valid.

Did you know that if your sliding doors or HVAC are installed by people without the right qualifications and experience, the warranty can be invalid? So ensuring you work with a licensed contractor will make sure this doesn't happen.

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What are the steps to become a licensed contractor?

Becoming a licensed contractor is a thorough process and the local government makes sure that contractors are sufficiently experienced, qualified, and insured. Here's a brief outline of the process that contractors must go through before they get their business license.

Choose a specialism or area

There are many different types of licensed contractors and each license will have different requirements and exams to pass.

The different types of contractors can be divided into three groupings:

  • Licensed general contractor

    — this type of contractor will oversee entire projects of residential or commercial work. They will do everything from obtaining building permits, hiring subcontractors, overseeing construction work, and ensuring the project is completed to a high standard.

  • Licensed specialty contractor

    — this includes all sorts of specialized craftspeople and tradespeople including carpenters, electricians, masons, etc. The exact specialisms and categories will vary based on the state license board and the trade exams will be tailored to the specific license.

  • Mechanical contractor

    — this category includes various mechanical areas such as plumbing, heating, and cooling installation. Usually, electrical work related to the installation of these systems will have to be performed by someone with a specialty electrical license, so some professionals will have both licenses.

Ensure they have the right level of education

Different types of building contractors license will have different license requirements including specific educational requirements. Some types of licenses will require degrees while others will require high school diplomas or other technical education qualifications.

Pass the relevant exams

Depending on the type of general construction license being applied for, the state or city may have a requirement to pass a licensing exam.

This is especially the case when applying for general contractors licenses where requirements are especially tough.


In many states, there will be a specific general contractors license board that oversees the exams and other license requirements for general contractors licensing.

Purchase the correct insurance

One of the key licensing requirements is proof of relevant insurance. For a general contractor, they need to provide proof of various insurance coverage with their license applications. This insurance will include:

  • Commercial and general liability insurance

    — this covers any accidents or injuries during the project, including job-related injuries or faulty workmanship.

  • Builders' risk insurance

    — this covers the building site and all materials while construction is ongoing.

  • Workers compensation insurance

    - this protects any employees or subcontractors who are injured while working on a construction project. It covers any medical costs, lost wages, etc.

  • Surety bond

    — this is not exactly insurance, as it covers the general public or anyone the contractor works with. It guarantees that the contractor will comply with any relevant rules and regulations related to their work.

Many insurance policies for general contracting will cover more than one of these areas.

The level of insurance coverage that a contractor has will allow them to work on specific sizes of projects. For example, a home improvement contractor who only works on smaller remodeling projects will require less coverage than a residential contractor. And commercial contractors will usually require much higher coverage than either of these other categories.

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Obtain the contractor's license

Once all the exams have been passed and documents procured the final step is for the contractor to apply for their commercial license. Each state, county, or city licensing board will have different registration requirements to become a licensed contractor but in general, the registration process will require them to submit proof of:

  • Passing the relevant exam
  • Educational requirements or qualifications
  • Relevant and sufficient insurance
  • A surety bond
  • Financial statements

What are the steps to become a licensed general contractor in Chicago?

The general contractor license requirements in Chicago include:

  • Proof of passing the exam with the City's trade licensing exams partner, Continental Testing Services, Inc
  • Details of all officers and a Certificate of Good Standing for each officer - Corporations and LLCs only
  • Proof of insurance
  • A General Contractors License Affidavit
  • Payment of relevant license fees

In Chicago, a licensed general contractor will have a specific class of license depending on the limits of their insurance policy.


So for larger construction projects, you might need a Class A or B contractor who will have $5 million and $3 million in coverage, respectively. However, a license for building contractors who focus on smaller residential projects might be Class E, with coverage of $500,000.

How do I check a contracting business' license?

Your local governments’ building or licensing department will usually have a register of all licenses awarded by category. You can generally visit their website, or contact the relevant department in your city or state government offices.

Frequently asked questions

What is the difference between a licensed contractor and a general contractor?

A general contractor oversees the entire construction project, both for residential and commercial projects. They look after all the aspects of the site and workers, as well as purchasing materials, and ensuring the project is completed on time and to budget.

To be a general contractor they must have a general contractor's license.

A licensed contractor can refer to many different types of building and specialty contractors, including general contractors. The type of contractor you require will depend on the type of project you are undertaking. The licensing requirements for each type of contractor will vary by state or city.

How do I obtain a general contractor license?

Check with your state, county, or city building department on the specific requirements for licensing in your area. To become licensed you will probably need to do some or all of the following, depending on the exact type of license you are applying for:

  • Have a certain level of specific education or experience
  • Pass the local contractor's exam
  • Show proof of insurance and bonds
  • Provide references
  • Provide proof of relevant experience
  • A financial statement may be required

What is a general contractor license?

A general contractor license allows the holder to work as a general contractor in a specific state, county, or city. Licenses are issued by the state, county, or city government, either through the building or licensing office.

How much does a contractor license cost?

The costs for obtaining a general building contractor license vary from state to state but the basic licensing fees are usually between $50 - $200 and cover administrative costs for the government department that administers the licenses.

Can a contractor work without a license?

Licensing requirements are generally decided at the state, city, or county level, but in general, any skilled work, or any project lasting more than a few hours, will require a licensed contractor. Certain smaller home improvement projects can be performed by an unlicensed individual but in general, if it's not a job you would consider doing yourself you should not work with an unlicensed contractor.

There are various risks if you hire someone without a relevant license. For example:

  • You, the customer, may be liable for any accidents or problems on the site.
  • If you have any issues with the contractor you may not have any legal recourse.
  • If a worker becomes injured, the customer may be liable for any expenses.
  • For work that is not up to code, you may also be liable.

Why work with Fortress Home

Fortress Home is a fully licensed general contractor in Chicago. They have been working in the city for over 20 years and have an unparalleled reputation for reliability and high-quality work. As a family business, they understand your needs and only work with the best tradespeople, professionals, and sub-contractors, many of whom are permanent members of the Fortress Home team. Working with Fortress Home you can trust that your project will be completed on time, within budget, and to an extremely high standard of workmanship.

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Fortress Home combines the roles of a general contractor, a construction partner, and a construction manager. Our talented workforce helps us professionally manage all aspects of on-site construction.

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