How to Vet a Commercial Vendor: Licenses, COIs, References, and Red Flags

Every facility manager has a vendor horror story. The roofer whose "crew" turned out to be two guys with a borrowed ladder. The plumber whose insurance certificate expired three months before the flood. The electrician who was licensed — in a different state.

The uncomfortable truth is that most vendor disasters were visible before the first work order. The paperwork told the story; nobody read it. Here's a practical vetting process that takes about an hour per vendor and saves you from the failures that cost real money.

Start with the license — and actually verify it

Never accept a license number at face value. Every state maintains a public contractor license lookup, and checking one takes two minutes. You're confirming four things:

• The license is active, not expired, suspended, or revoked.
• It matches the entity you're hiring. A license held by "Mike Smith" doesn't cover "Smith Brothers Mechanical LLC" unless the state says it does. Qualifier arrangements vary by state — verify the business entity, not just the individual.
• The classification covers the work. A general contractor's license doesn't automatically permit standalone electrical or mechanical work in most states. A handyman registration almost never covers anything with a permit attached.
• Disciplinary history. Most state boards publish complaints and enforcement actions. A pattern of abandoned-job complaints is exactly what it looks like.

For multi-site portfolios, this gets harder: a vendor legitimately licensed in Georgia may be working unlicensed one exit down the highway in Florida. If you operate across state lines, license verification has to happen per state, per trade.

COIs: the document everyone collects and nobody reads

A Certificate of Insurance is only useful if you check what's actually on it. The common failure points:

• Expired or about-to-expire policies. A COI is a snapshot, not a guarantee. If the general liability policy expires mid-project, you're exposed for everything after that date. Track expirations and require renewals — this is the single most common compliance gap in vendor files.
• Inadequate limits. For most commercial trade work, $1M per occurrence / $2M aggregate in general liability is the floor. Roofing, electrical, and anything structural often warrant more.
• Missing workers' comp. If a vendor's employee gets hurt on your roof and the vendor has no workers' comp, the injury claim comes looking for the deepest pockets on the property — usually the owner or manager. "We're all subcontractors" is a red flag, not an answer.
• No additional insured endorsement. Being named as additional insured on the vendor's policy is what puts their carrier in front of yours when something goes wrong. Ask for the endorsement page, not just the checkbox on the certificate.
• Auto liability. Vendors drive to your sites. Commercial auto coverage matters more than most managers assume, especially in parking lots full of customer vehicles.

One more step most people skip: verify the COI with the issuing agent. Fraudulent certificates are easy to produce and depressingly common. A five-minute call confirms the policy is real and in force.

References that actually tell you something

"Can you provide references?" produces three hand-picked happy customers. Ask better questions instead:

• "Give me a reference from a job that went sideways." How a vendor handles a callback, a dispute, or a failed inspection tells you more than ten smooth projects.
• Ask references about invoicing, not just workmanship. Were change orders documented before the work? Did final invoices match quotes? Billing discipline predicts the whole relationship.
• Ask about communication under pressure. Did they answer the phone during the emergency, or after it?

Supplement references with what's publicly available: state license board complaints, court records for mechanic's liens and litigation, and how long the entity has actually existed. A company "in business 25 years" whose LLC was registered eight months ago has a story to explain.

Red flags that should end the conversation

Some signals justify walking away regardless of price:

• Reluctance to provide license numbers or insurance documentation ("we can get that to you after we start")
• Large upfront deposits on routine repair work
• Quotes dramatically below every other bid — someone is skipping permits, insurance, or payroll taxes, and that risk lands on you
• No physical address, no verifiable entity, cash-only preferences
• Pressure to skip permits "to save time"

The real cost: doing this at scale

Vetting one vendor is an afternoon. Vetting and maintaining a bench of vendors — multiple trades, multiple markets, COIs expiring on rolling dates, licenses renewing on state-specific cycles — is an ongoing program. Industry data consistently shows that a meaningful share of vendor files at any given property contain at least one lapsed document, and the gap only surfaces when there's a claim.

That's why serious operators treat vendor compliance as infrastructure: a system with renewal tracking and enforcement, not a folder of PDFs collected once at onboarding. Whether you build that in-house or hand it to a partner, the standard is the same — nobody touches your property until the paperwork is current, verified, and covers the work being done.

If maintaining a vetted, compliant vendor bench across every market you operate in sounds like a full-time job, that's because it is — and it's ours. VXO manages HVAC, plumbing, electrical, and general repair for multi-site operators nationwide, with vetted local vendors and a single point of contact. Reach out to our team or request service anytime through the VXO client portal.