FOR ALL YOUR SURETY BOND NEEDS.
These surety bonds are general for all states.
The District of Columbia requires contractors who remodel, renovate, repair or otherwise improve residential structures to be licensed as home improvement contractors. The home improvement contractor licenses issued in the District are good for two years and are only issued to applicants who have met all licensing requirements, including obtaining a two-year home improvement contractor bond in the amount of $25,000.
A home improvement contractor bond is a form of license and permit bond, because it is a requirement for becoming (and remaining) licensed. The bond provides protection for the Department of Consumer and Regulatory Affairs and for consumers against financial loss resulting from the contractor’s violation of any law or regulation governing the home improvement industry in the District.
Anyone who wants to do home improvement work in the District of Columbia must be licensed as a home improvement contractor, which requires the purchase of a $25,000 home improvement contractor surety bond.
The three parties legally bound together in a DC home improvement surety bond contract are the:
The obligee has established the bond requirement and the $25,000 penal amount, and it has spelled out the specific terms and conditions the principal must comply with to void any claims against the bond. If the principal commits a violation that results in a financial loss to the obligee or a specific homeowner, the injured party may file a claim.
When a claim is filed, the surety will investigate to make sure it is valid and, if it is, will attempt to negotiate a settlement—for example by having the contractor redo unacceptable work. If that negotiation is unsuccessful, the surety will typically pay the claim on behalf of the principal, who must subsequently reimburse the surety. Legal responsibility for paying claims ultimately rests with the principal, not the surety.
All surety bond premiums are calculated as a percentage of the required bond amount. That percentage, known as the premium rate, is determined by the surety on a case-by-case basis. The main factor the surety considers to determine premium rates is the applicant’s credit score, which is the best indicator of the contractor’s ability to reimburse the surety for any payments advanced to claimants by the surety.
Applicants with good credit usually pay the standard market rate for surety bond premiums, which is between 1% and 3%. Applicants with credit challenges usually can get bonded but will pay a higher premium rate, perhaps as much as 15% of the required $25,000 bond amount.
If you’re planning to apply for a home improvement contractor’s license in the District of Columbia, start the ball rolling now by talking to one of our experienced surety bond professionals about getting the home improvement bond you need.
