What is a Contractor License Bond?
Contractor License Bonds are required by most states to guarantee that a general contractor will operate their business in compliance with the rules and regulations pertaining to their specific contractor license. Ultimately, these bonds exist to protect the public from fraudulent practices or from being ripped off by a contractor. Lance Surety offers numerous CLB programs designed to get all types of contractors approved at excellent rates, in all 50 states.
It is important to understand that Contractor License Bonds are NOT the same as Bid and Performance Bonds, which is a common misconception. They guarantee the compliance with a state or local contractor’s license, where as most performance bonds guarantee that obligations of a contract are fulfilled.
Questions about Contractor License Bonds
- How can I become a Bonded Contractor?
- How much does a Contractor License Bond cost?
- Can I get a Contractor License Bond if I have bad credit?
- Will I have to post collateral?
- Does a Contractor License Bond guarantee a specific Contract?
- Will my Contractor License Bond provide coverage for multiple states?
How can I become a Bonded Contractor?
First, apply for your specific bond. We have an online application where you can get a free quote in just minutes. Once you obtain your bond, you’ll submit your bond along with your license application to whatever government entity is requiring you to be bonded.
How much does a Contractor License Bond cost?
Annual premium amounts are determined based on owner personal credit. Contractors with stellar credit may be eligible for standard market rates, which range from 1% to 3% of the bond amount. If the owner has a low credit score, or past due items on their credit report, annual premium typically ranges between 5% to 15% of the bond amount.
Can I get a Contractor License Bond if I have bad credit?
Yes. While many sureties only offer quotes to customers with stellar credit, Lance Surety has a variety of contractor license bond programs that allows us to approve over 99% of applicants instantly through our online application. Your annual premium will depend on your individual credit profile.
Will I have to post collateral?
No. With very rare exceptions, our bond approvals do not require collateral. With our exclusive bad credit programs, we are able to offer quotes with just an annual premium requirement.
Does a Contractor License Bond guarantee a specific Contract?
No. These bonds guarantee compliance with a contractor’s state or local license. If you need a bond to guarantee performance of a specific contract, you’ll want to apply for a Contract Bond. These include Bid Bonds, Performance Bonds, Maintenance Bonds, etc. Keep in mind that underwriting criteria is stricter for constructions bonds.
Will my Contractor License Bond provide coverage for multiple states?
No. You'll need to obtain a separate surety bond for each state that you plan on conducting business in. However, be sure to check with each state during the licensing process as some do not have this particular bond requirement.
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