Story #1. Homeowner hires an unlicensed contractor to help with some carpentry work. Nail bounces into contractor's eye, gets bill for $13,000.00. (ouch!)
Story#2. Homeowner hires unlicensed contractor to haul materials to jobsite. Contractor gets seriously injured on ATV. Requires medivac, surgery, re-hab etc. etc. etc. Homeowner's insurance has to pay over one million, cancels policy. Very difficult to obtain insurance with a million dollar claim on record.
There are many stories like this, most include a bankruptcy filing for the homeowner. It is a good idea to request license and insurance paperwork from your contractor. Odds are that everything will be fine but the longer you live the more you have to live by the law of averages. It is like the law of gravity, you can't ignore it.
"You can't learn everything the hard way" (Anonymous Contractor)