Colorado Contractor License Bonds Explained
Many types of contractors in Colorado have to obtain state or city licensing in order to launch their operations legally. In the cities of Denver and Arvada, certain types of contractors also have to provide a contractor license bond as part of becoming fully licensed.
The bonding requirement serves as a safety mechanism that protects your customers against potential illegal activities you may engage in as a contractor. The bond guarantees your legal compliance.
The contractor license bond that you obtain works as a contract between three entities. Your contracting company is the principal, the relevant city authority is the obligee that requires it, and the surety is the third party that provides it.
Questions about Contractor License Bonds in Colorado
When is this bond required?
In Colorado, contractors do not have to meet a statewide requirement for obtaining a contractor license bond. The cities of Denver and Arvada impose a bonding criterion for certain types of contractor licenses. In Denver, cement sidewalk, structural, sewer, and general contractors have to get bonded. In Arvada, municipal (right of way) contractors have to get a $20,000 surety bond. The purpose of the bonding is to guarantee that the contractor will adhere to all applicable regulations and legislation.
What are the bond costs?
The surety bond amount that you have to provide as a Colorado contractor license varies on your specialty and on your location, as it is set by your city's authorities. The bond premium that you have to pay is a percentage of the required amount, which is based on the strength of your personal and business finances.
The surety that you apply with determines your surety bond cost by considering a range of factors, including your personal credit score, business finances, and liquidity and assets that you may have. It assesses them to measure the level of the bonding risk. You are more likely to get a lower bond price if your finances are in good shape.
|Colorado Contractor License Bond Cost Based on Credit Score|
|Surety bond name||Bond amount||Credit Score|
|Above 700||Between 650-699||Between 600-649||Below 599|
|Denver cement sidewalk contractor bond||$10,000||$100-$150||$100-$250||$250-$500||$500-$1,000|
|Denver structural contractor bond||$25,000||$187.5-$375||$250-$625||$625-$1,250||$1,250-$2,500|
|Denver sewer and general contractor bond||$50,000||$375-$750||$500-$1,250||$1,250-$2,500||$2,500-$5,000|
|Arvada municipal (right of way) contractor bond||$20,000||$150-$300||$200-$500||$500-$1,000||$1,000-$2,000|
Can I get bonded with problematic finances?
You may find it more difficult to obtain a contractor license bond if your finances are not in the best shape. For applicants struggling with issues such as low credit scores, tax liens, bankruptcies, and civil judgments, Lance Surety Bonds operates its Bad Credit Surety Bonds program.
The bad credit bonding rates typically range between 5%-10%. They are slightly higher, as the bonding risk is increased. Still, due to our excellent partnerships with the top A-rated, T-listed surety companies, we are able to offer you a bonding option that matches your circumstances.
How can I get this bond?
The process for obtaining a Colorado contractor license bond is as follows:
Our bonding specialists will get in touch and provide you with a free, no-obligation quote
You can then buy the bond online
Receive a digital as well as a hard copy of your bond
In case you want to learn more details about the bonding process, you can refer to our detailed overview of the How to Get Bonded page.
Lance Surety Bonds' experts are here to help. For any queries, you can reach us at (877) 514-5146.
How are bond claims handled for contractors?
Your Colorado contractor license bond serves as an additional layer of protection for your customers and for city authorities that have issued your license. If you fail to abide by relevant laws, you can receive a claim against your surety bond. A harmed party can seek reimbursement, which can be up to the full bond amount you have posted.
On proven claims, your surety may step in to cover the costs, so that claimants receive their compensation in due time. However, you are fully liable and have to repay it, as set in the bond indemnity language. This makes bond claims a serious financial threat for your business, which is why they are best to be avoided.