Your property may get damaged result in a big financial loss to you. An accident to workers when they are working on your premise or at your home, could result in heavy financial payment or compensation to the workers. If the contractor is not insured, you will be liable to pay for damages or compensation to workers.
If the contractor is fully insured, he will be responsible for the losses.
Also note if you use an unlicensed contractor for modifications to your house or building, you may face difficulty in selling your it in the future.