A 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.
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. Because surety bonds are fully indemnified, the contractor is responsible for paying any claims filed against the bond. Not only do we 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.
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.
We are 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 to shop to get the best rate 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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