If you are a construction or hardscaping professional, you probably already know that at least $12,500 worth of contractor license bonds in California are required to be held by all licensed contractors. But who needs to carry a contractor’s bond—and what do these bonds even do or mean?
Contractor bonds in California are required for all licensed contractors, so this means that if you’re doing work on someone’s home or business that opens the possibility that the homeowner or property owner may be injured or have their space damaged by questionable work, you more than likely need a contractor’s bond.
A contractor’s bond is a type of surety bond that protects three parties, both legally and financially: you, the member or members of the public that you are serving, and the company that has hired you as a contractor if you are not working independently. As a contractor and a company, the purchase of your bond is like a personal promise to always provide honesty and quality in your work. However, the main purpose of a contractor’s bond is to protect the person whose home or business you are working on from unscrupulous business practices or shoddy work that can cause an injury liability. If a contractor commits financial malfeasance or the contractor refuses to abide by state, federal, or local laws, the consumer may report the contractor to the local authorities and regulatory bodies that govern contracting and construction. If someone has been injured or otherwise negatively affected by unethical business or work practices, the consumer may file against the bond for compensation. A contractor’s bond is not a guarantee of quality, but a form of “credit” that can provide the consumer with recourse should something go wrong. Bonds also incentivize contractors to always maintain the highest standards of their craft.
Do you have your state-required bonds? If not, you may be putting yourself at risk of fines and even a potential lawsuit. Contact DJM Insurance Services today by calling 800-763-0698 to learn more about bonds and your options.