I'll start with a chart, a chart I made for our Flood Recovery here in Louisiana.
The General Contractor is IEM Inc. which requires a state license.
- IEM Inc. hired 5 Sub-Contractors each of which needs to be licensed as a general home builder for their activity.
- Each of the 5 Sub-Contractors hire other construction companies to do the work which at each phase requires a specialty license in the state of Louisiana.
- Foundation work even labor only
- Framing work even labor only
- Plumbing work
- Electrical work
- Mechanical work
- HVAC work
- Concrete work (driveways, sidewalks, parking slabs)
You can see from IEM Inc, to each specialty trade there is a state contractors license associated with it.
Your permit has space for each specialty contractor, be sure you check to make sure they are in the online database or call the state contractors board. It's very easy to verify.
The big issue is insurance and contract law. If someone gets hurt and no insurance is provided by the Sub's your homeowners or you will be liable. If material is stolen you will pay if the general liability insurance by the builder doesn't cover it or it's not current.
It's all about saving you from a liability headache.
Other than that, there are no protections, laws, policy or state procedures to protect you from poor quality labor, cheap materials (only defective I believe) and contractor fraud. You are on your own with these items.
But, as a homeowner that has worked with a few licensed contractors in my life I will say those that are licensed are less apt to cheat you in any way. But, it has happened so treat them like you would your mechanic, check prices, see the parts before and after and always check certifications, trade school, experience and references. Just because you have one master mechanic working in the shop doesn't mean everyone working on your vehicle is a master mechanic. Same goes with home builders, some say they are builders while others are builders.