Licensed and bonded contractors give you the insurance should any damage happen during the renovation or construction, you are assured that your contractor will take the responsibility for it. And that responsibility is not just for damage to your house, but also for any injury that might occur during construction. They need to have general liability insurance and workers compensation insurance
General liability insurance protects the homeowner against damages such as the contractor collapsing your sewer line or flooding in your basement due to a bad plumbing fix or scratching up your beautiful hardwood floors with their heavy equipment.
Workers compensation insurance protects any employee injured on the job by that insurance.  However, if the company is not insured, you, the homeowner, could be open to being sued by the injured employee.