Learn more about contractor license bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Contractor License Bonds?
A contractor license bond is a form of license bond commonly required as a condition of becoming and remaining licensed as a contractor in a given state or municipality. The bond guarantees that the contractor will conduct business in an ethical and professional manner, abiding by all applicable rules and regulations. It protects both the state agency or municipal government requiring the bond and the parties that hire the contractor. It does not protect the contractor.
Who Needs Them?
Anyone applying for a contractor’s license in a state or municipality that requires a contractor license bond must purchase one as part of the process for obtaining or renewing a license to operate in that jurisdiction. These bonds are also required in many places in order to pull permits with the city or county. You can use our state search tool to determine whether the state and/or municipality in which you want to operate requires a contractor bond.
Keep in mind that you may need other construction surety bonds as well, such as a performance bond or payment bond.
How Do They Work?
If a bonded contractor does not live up to the terms of a contract, the project owner could incur a financial loss. Without a contractor license bond, the agency or municipality that issued the contractor’s license could be sued for damages.
When a claim is submitted against the bond, the surety company will investigate to determine the validity of the claim. If the claimant is found to have suffered a financial loss due to the actions of the contractor, the surety company will pay the claim up to the total amount of the bond. The surety company will then attempt to recover from the contractor the amount paid out to the claimant.
How Much Do They Cost?
The licensing agency or municipality establishes the total amount of the contractor bond. This amount is multiplied by the premium rate to determine the cost of the bond. The premium rate is determined by the surety company depending on the state, city or county requirements for the bond.
Most contractor license bonds are $50-$250 per term period with no credit check.
Contractor License Bond Application
Let us help you get your contractor license bond. Submit an online application today. We can offer turnaround times of 24 hours or less.