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Let us inform you about PA State rules or codes.

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Contractor Licensing

The Commonwealth of Pennsylvania currently has no licensure or certification requirements for most construction contractors (or their employees). https://www.dli.pa.gov/ucc/Pages/Contractor-Licensing.aspx

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The Commonwealth of Pennsylvania has a registration application for Contractors

(Not a License) https://hic.attorneygeneral.gov/login.aspx

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The Commonwealth of Pennsylvania Registration is called HIC (Home Improvement Contractor) There are no special qualifications needed to obtain the HIC registration, anyone with a name and a $50.00 fee can get it. 

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Anyone can Register a name in The Commonwealth of Pennsylvania and obtain a HIC, registration will only provide the Attorney General's Office with the person who is registering information, such as the Name of the Company, Address, SS#, or EIN#.

Registration with the Attorney General's Office does not give you a special license, but will just register you or your company name with the state. 

You will be able to register an LLC, Corporation, or Sole Proprietary, you can also register a fictitious name, and you can obtain a fictitious name from The Commonwealth of Pennsylvania by paying a fee. 

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PA HIC and PA Fictitious Names are different from each other, you can obtain both. Example: John Construction LLC with the HIC registration can do business as John The General Contractor Fictitious Name. 

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HICPA Act 

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As the consumer, I would be more concerned about the Cotractor's Insurance than the Registration. A person can enter a contract without a PA HIC and/or Fictitious Name, and/or LLC, or Corporation as long as the contract is less than $5,000.00 in a fiscal year.

At this point, the Insurance becomes an important factor of the contract, you could say, more important than registration with the State. 

Let us give you an example: you are looking to improve your Bathroom, you searched the internet but everyone is either too high in prices or they can schedule you in four to five months. You talk to your neighbors, and the neighbor 3 house down does lots of improvements to his/her house. So, you talk to him/her, and he/she says that it can be done for less than $5,000.00. You agreed to have the work performed by your neighbor by signing a contract stating that he/she will do the work described....... for the amount of $4,800.00. You just entered a contract with someone that does not have PA HIC, an LLC, Corporation, or a Fictitious Name, meaning: he/she is not registered with the state in any way. It's ok, he/she is my neighbor, by the PA rules, codes, and acts, he/she is allowed to perform no more than $5,000.00 worth of home improvement for someone in a fiscal year. Projects started, and your neighbor is doing a great job, overnight a pipe burst open, and the second floor, the first floor, and the basement are flooded. 

By The Commonwealth of Pennsylvania, you and your neighbor enter a legal contract, and you have no idea if he/she caused the pipe to burst or if it was just old pipes, your homeowner's insurance will not cover the damages because you did not hire a professional, your neighbor does not have insurance, he/she is thinking that He/she was helping you out with your project. Now, you are stuck with paying the bill.

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The example above describes that anyone can enter a contract and do minimum work without being registered but insurance should be a requirement no matter if you enter a $5.00 contract or a $5,000.00 contract. 

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Even though it is legal to enter a contract without being registered with The Commonwealth of Pennsylvania as long as is less than $5,000.00 in a fiscal year, insurance is always required.

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The correct term is to ask for Insurance and Registration in that order. 

This page is titled License and Insurance due to people's misinformation about Contractors' licensing in PA. 

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Bonded or Surety Bond

A surety bond is a promise to be liable for the debt, default, or failure of another. It is a three-party contract by which one party (the surety) guarantees the performance or obligations of a second party (the principal) to a third party (the obligee).

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A contractor will get bonded because he may or may not finish your project. The Surety Bond will give the contractor a way not to finish your project and get away with it. 

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In other words, the contractor is unsure if he can finish some of the projects and will get bonded, in the meanwhile you are stuck, the project is not finished, and you will need to file a ton of paperwork just to get your project restarted by another contractor. 

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A good contractor shouldn't need to be bonded, All you need to do is, have the property owner on the contractor insurance listed as an additional insured. Only contractors that they think they are unable to complete a project get bonded.

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The key difference between insurance and bonds is who gets the money if a claim is filed:

• Business insurance compensates your business for losses covered by your policy. For example, if you accidentally cause property damage to someone else, your general liability insurance can pay to repair or replace the damaged property. The insurance will also pay for your legal costs if you get sued over an accident that’s covered by your policy.

• A bond pays your client. If your client files a claim for a problem like incomplete or shoddy work, the surety company will pay your client the cost to rehire another company to complete the work. Your business will have to reimburse the surety company.

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Additional Insured

An additional insured is a third party – either a person or a business entity – that has a liability exposure in a business relationship.

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