You should be able to get a certificate insurance sent from his insurance company. Don't accept is via the contractor or some piece of paper. Only accept is from the insurance company directly. It is done this way to preven fraud.
Secondly, word of mouth is helpful. If you know that friends have had someone who is dependable, use them.
Always get a contract and don't put too much money out, only what you agree to in the contract. Some money is need up front to buy materials and get the ball rolling.
Check with the BBB. If something is fishy, others will have called and there will be a record. Just because he isn't registered with the BBB doesn't mean he's bad, many contractors don't register.
If you do get references, you need to ask for truthfulness. A lot of people don't want to give a bad report or mention problems.
Find out how long he/she has been in business. Do they have a steady business and address? Is there a criminal record?
Are they married? Do they have kids? Do they have a driver's license? Are they renting or do they own a house? Do they have a good kept appearance? Do they use slang? It's almost like you're a loan officer.
How did they start their business? Did they go to school, work as an apprentice, grow up working for the family business, or just pick up a hammer and call themselves a carpenter.
Your best bet in a small community is word of mouth, certificate of insurance, call the BBB, and references. If they don't come clean in these areas they probably are second rate.
Josh Jaros Jaros Brothers Construction, The Woodlands, TX