Contractor License Bonds California

Contractors License Bond is a type of surety bond that most states require licensed contractors to carry. The primary purpose a contractor license bond is to protect consumers. A claim may be filed if a contractor commits financial misconduct or the contractor does not adhere to local or state regulations and laws.

In California, Arizona, and Washington, all licensed contractors are required to maintain a contractor license bond in the amount of $12,500 with the California Contractors License Board (CSLB). A California Contractors License Bond does not guarantee performance or competence, but rather helps compensate consumers when contractors violate licensing laws.

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Contractors should understand how contractor’s license bonds work and what purposes they serve. A contractor’s license bond is an agreement between three parties:

The Principal: The contractor that purchased the bond

The Obligee: The “consumer” or “project owner” who requires and is protected by the bond

The Surety: The company who financially backs the bond

A Contractors License Bond does not protect the contractor, but rather the obligee. It is essentially the clients and the state in which the contractor is licensed that is insured, not the contractor itself. Because surety bonds are fully indemnified, the contractor is responsible for paying any claims filed against the bond. If someone were to file a claim against the bond, and the claim is valid, the surety company pays the claim initially, then the contractor reimburses.

Not only does DJM Insurance Services offer license bonds, but we can also write bid and performance bonds in California, as well.

Contractor license bonds are a form of credit, not insurance, and exist to protect the consumer. Since Contractor License Bonds are a form of credit, contractors must apply and qualify for a bond much like other forms of credit. Acquiring a bond typically involves an application process, a credit check and some level of validation that the contractor has the financial stability to maintain the bond.

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How much does a Contractor’s License Bond cost?

The cost of a contractor license bond varies between different surety companies. Rates are determined by the contractor’s credit score and overall credit worthiness. When a contractor in Arizona or Washington lacks credit or has bad credit, the rate will most likely be considerably higher.

Apply For a Contractor’s Bond Today

Not only is a Contractors License Bond a valuable business asset, but also required in the majority of states. Acquiring a bond shows the contractor is trustworthy, responsible, and always follows through on their commitments. In fact, property owners rarely hire contractors that do not hold current bonds, as the property owner then becomes liable if something goes wrong.

DJM Insurance Services is dedicated to serving the needs of our contractor clients by offering Contractors License Bonds and contractor’s liability insurance in California from a variety of surety companies. Because we specialize in the construction industry, we know which surety markets offer the best rates based on your unique credit situation. Buy your contractor license bond online now by completing the form on this page or call us at (800) 763-0698 for your free, no-obligation Contractors License Bond quote.

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