This requires contractors who are performing on construction contacts to have to subcontract any construction work outside the scope of its license to properly licensed construction contractors. They are also required to post a minimum of a $15,000 surety bond. Under current law a license bond based on the type of work and volume of the business is required. This pertains to the landscape contractor performs in an amount ranging from $3,000 to $15,000. This new bill would then require a new bond amount for landscape contractors performing on contractors outside the scope of their license.
HB 704: Miscellaneous Bond – Home Repair Service Contracts
This requires home service contract providers to post a financial security deposit in an amount equal to 5% of the gross consideration received on the sale of all service contracts, less any claims paid. This deposit must be not less than $25,000. Cash or a surety bond is also permitted to fulfill this requirement. In liaison with the security deposit the service contract provider may maintain a funded reserve account.
HB 1275: License Bond – Sewage Treatment Contractors
Sewage treatment contractors must post a surety bond in the amount of $25,000 if the bond covers both plumbing work and subsurface sewage treatment work. Current law required a license bond to be posted in the amount of at least $10,000 for such contractors.
Farm labor contractors and garment manufacturers in California may be required to post a bond at the time of their license/registration renewal to secure the payment of judgements against them for unpaid wages. If any judgements were not satisfied when the renewal application is submitted, then the bond will be required. This law became effective January 1, 2010.
Lance Surety’s Farm Labor Contractor Program
Lance Surety offers some of the lowest rates in the country for this type of bond, and can offer instant credit-based quotes. Our rates for customers with poor credit start as low as 5% of the bond amount. Contact one of our agents if you have any questions, or apply online for a free quote.
HVAC Contractors in Alabama have a new surety bond amount of $15,000 that may be required by the State Board of Heating and Air Conditioning Contractors. This used to be a $10,000 contractor license bond requirement, but was increased on August 1, 2009 with House Bill 184. Refrigeration contractors as well as “active” HVAC contractors have this bond requirement.
Enacted on May 13, 2009, Alabama House Bill (HB) 184 increased the bond amount that can be required by the State Board of Heating and Air Conditioning Contractors of certified heating and air conditioning contractors in the state. The amount that the State Board can require went up from $10,000 to $15,000.
Over the past decade, the surety bond industry has seen some significant changes that have changed the industry landscape, particularly when it comes to high risk bond programs. Companies that were dropped by their bond companies as a result of bad credit, etc, have been forced to find new bond agents in order to help them attain new surety bonds. This created a slew of challenges for agents, as they now have to find markets for these customers with credit problems, and will typically require significant collateral in order to write a bond for someone with bad credit. To serve these types of principals, Bad Credit Surety Bond Programs came into play.
High Risk = Higher Premium: Before there were high risk bond programs, underwriters of surety bonds would only write bonds for customers (or principals) that presented little to no risk of having a claim arise against them. In other words, they went after a “0% loss ratio”, and the bond companies were in a position to do so. With Bad Credit Surety Bond Programs, the underwriters of bonds are able and willing to write bonds for principals that are higher risk (of having a claim), and can do this by approving them at higher premiums. Similar to insurance companies, surety bond underwriters can approve a wider array of customers, but approval for those more likely of having a claim is obviously comes at a cost to the principal… higher rates.
Collateral vs. Increased Premiums: Early on in the process, Bad Credit Surety Bond Programs brought about a need for bond companies to require collateral from principals. This tends to be a cumbersome, time-consuming process that involves a lot of administrative effort, and therefore many bond companies decided to avoid the collateral requirement by offering higher premium rates to their principals. Customer preference depended on the specific principal’s financial situation. Typically, however, the bond programs that offered higher premiums vice collateral were less expensive for the first year of the bond, but over time those that required collateral proved to be less expensive. This was due to the fact that the collateral would eventually be returned to the customer (roughly a year after the bond’s release) if no claims arose.
Knowing Your Options: It is important for principals with bad credit to understand what all of their options are. While many Bad Credit Surety Bond Programs are designed to meet the needs of customers with poor credit, and often times prove to be the most cost-effective option, they are the only option available. For example, an Irrevocable Line of Credit (ILOC) is an alternative whereby the bank will freeze liquid assets of a principal in an amount equal to the total amount of the surety bond they would need to purchase. This would only be more preferable for principals with enough liquid assets to comfortably have the amount of the ILOC frozen by a bank. For customers that truly value their liquidity, and ability to quickly have cash on hand, an ILOC is probably not a viable option. While ILOCs have traditionally had services of around 1% the cost of the line of credit, the money market rate will have an impact on that as well, and can significantly raise the annual rate of the ILOC for the customer. For example, if the money market rate is 5%, and the service fee for the LOC is just 1%, the actual annual rate the principal pays for the ILOC is 6%. Customers must understand the choices available to them, and should choose the option that best fits their specific needs.
Outlook: High Risk Surety Bond Programs have been around for more than 5 years now, and it does not appear that they are going anywhere in the foreseeable future. More and more companies are willing to write surety bonds for principals with bad credits, and those that carry some sort of risk of having a claim arise. While increased premiums are part of what makes bonding companies willing to do this, the increasing number of bonding companies writing high risk has created competition. Competition is obviously a good thing for the customers, in this case the principals with bad credit, because it will eventually drive premium rates down, making Bad Credit Surety Bonds more affordable.
In July 2008, in response to an extreme drought and in an effort to more efficiently use the precious resource, water, the General Assembly of North Carolina passed House Bill 2353 (Senate Bill 1795), short title “Irrigation Contractors Licensure/Fees”, which created “The North Carolina Irrigation Contractors’ Licensing Board”. The initial board was to be selected no later than 1 October 2008.
According to the law, any person in the state that operates as an “irrigation contractor”, or under the appearance of an irrigation contractor must be properly licensed inNorth Carolina. The bill requires all “irrigation contractors” in the state to purchase a $10,000 license bond (type of commercial surety bond) in order to operate.
Any irrigation contracting or construction performed by a person, partnership, association, or any other type of group must be directly supervised by a licensed member of the state’s “Irrigation Contractors’ Licensing Boars”, which was created from this bill.