Why You May Be Liable for Damage Caused by an Unlicensed Contractor. If you do use an unlicensed, uninsured firm or individual, don't be mislead into believing that your homeowner's or personal liability policy necessarily protects you. Homeowners who hire unlicensed contractors to perform work may expose themselves to liability for damages and injuries suffered by third parties. A large number of home and building owners have been dragged into litigation involving uninsured contractors. If an employee of an unlicensed contractor is injured on your home or building, you may be responsible for his injuries or disabilities. In addition, you probably have no protection in the event damage is done to your property or the property of others by the unlicensed contractor during the course of the work. In many cases, the third party would likely have a valid claim against you for negligence - both your direct negligence and the negligent acts of your agent, the unlicensed contractor. You probably would not find relief in a claim against the unlicensed contractor to recover from your loss, since it's unlikely he'd have personal assets worth pursuing.