What Is a Delaware Contractor License Bond?
In a number of places in Delaware, contractors have to get a contractor license bond in order to get licensed and be allowed to operate. Construction specialists in Newark, Wilmington, and New Castle County, as well as non-residential contractors in the state, all have to post a bond before launching their business.
The goal of this bond is to guarantee that you will follow all local and state rules that govern your trade. If any unlawful actions on your side lead to damages for another party, they can seek a compensation by making a claim on your bond.
The license bond works like a contract between three entities. Your contracting business is the principal that has to get bonded. The respective local or state authority that requires the bond is the obligee. The surety is the party that provides the bond and backs your company.
Questions about Contractor License Bonds in Delaware
Who needs a contractor license bond in Delaware?
Not all contractors in the state have to get bonded in order to obtain their Delaware contractor license. However, some cities and counties do require contractors to obtain a surety bond.
In the City of Newark, general contractors, subcontractors, and minor renovations contractors need to post license bonds. Bond amounts vary from $10,000 to $200,000 and depend on the license type. The bond guarantees you will follow the city’s Construction Codes, as well as federal and state regulations.
In the City of Wilmington, plumbers and contractors working on public streets, sidewalks and curbs also need to get bonded with the city authorities.
In New Castle County, Class A, B, C and U contractors, as well as master HVACR contractors, master plumbers, sewer and drainage cleaners, decorative appliance contractors, outside utility contractors, and third party inspectors all need a license bond. The bond ensures your compliance with the New Castle County Building Code, as well as with state and federal laws. Bond amounts vary between $10,000 and $200,000.
Non-residential contractors who want to conduct their activities in Delaware need to get bonded as well. They have to provide a bond in an amount equal to 6% of the project value of the work they want to execute.
How much does it cost to get bonded?
The bond requirement for Delaware contractors depends on their location. Your city or county authorities set the exact bond amount that you have to provide. However, you don’t pay the whole bond amount to get bonded. You only cover a bond premium, which is a few percentage points of that amount. For applicants with good finances, the surety bond cost is likely to be .75%-1.5% of the bond amount. Rates for applicants with slightly lower scores are up to 5%, and for applicants with even lower scores - upward of 5%.
Your exact bond price is formulated on the basis of your personal and business finances. The surety you apply with needs to take a close look at your personal credit score, business documents, fixed and liquid assets, as well as professional experience. Your bond price is likely to be lower if your overall application is solid.
You can consult the bond prices in the table at the end of this section for an estimate of the cost of your bond.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|City of Wilmington contractor bond||$3,000||$100||$100||$100-$150||$150-$225|
|City of Newark|
|General contractor bond for projects below $100,000
HVAC, fire, plumbing and mechanical limited subcontractor bond
|General contractor bond for projects between $100,000 and $250,000||$75,000||$562,5-$1,125||$750-$1,875||$1,875-$3,750||$3,750-$5,625|
|General contractor bond for projects between $250,000 and $500,000||$100,000||$750-$1,500||$1,000-$2,500||$2,500-$5,000||$5,000-$7,500|
|General contractor bond for projects between $500,000 and $999,999||$150,000||$1,125-$2,500||$1,500-$3,750||$3,750-$7,500||$7,500-$11,250|
|Unlimited general contractor bond for projects above $1 million||$200,000||$1,500-$3,000||$2,000-$5,000||$5,000-$10,000||$10,000-$15,000|
|Minor renovation contractor bond for projects below $25,000||$10,000||$100-$150||$100-$250||$250-$500||$500-$750|
|Minor renovation contractor bond for projects between $25,000 and $75,000||$25,000||$187.5-$375||$250-$625||$625-$1,250||$1,250-$1,875|
|New Castle County|
|Sewer and drain cleaner bond, master plumber bond, and decorative appliance contractor bond||$10,000||$100-$150||$100-$250||$250-$500||$500-$750|
|Class C building contractor bond and master HVACR bond||$25,000||$187.5-$375||$250-$625||$625-$1,250||$1,250-$1,875|
|Class B building contractor bond and outside utility contractor bond||$50,000||$375-$750||$500-$1,250||$1,250-$2,500||$2,500-$3,750|
|Class A building contractor bond||$150,000||$1,125-$2,500||$1,500-$3,750||$3,750-$7,500||$7,500-$11,250|
|Class U building contractor bond and||$200,000||$1,500-$3,000||$2,000-$5,000||$5,000-$10,000||$10,000-$15,000|
Can I get a bond with bad credit?
It can be a challenge to get the contractor license bond you need if you have problematic finances, tax liens, bankruptcies, or civil judgements. However, it is by far not impossible.
The rate for such applicants is higher, somewhere in the range of 5%-10%, which compensates for the higher risk. You can learn more about getting bonded with a low score, from our Bad Credit Surety Bonds page.
How do I get my bond?
In case you want to learn more about how bonding works, you can read through our How to Get Bonded page, or simply call us at (877) 514-5146. Our experts will be happy to assist you.
What happens in case of a bond claim?
Your contractor license bond does not protect your business. Instead, it safeguards the interests of your customers. If they are harmed by any illegal actions that you might engage in, they can make a claim on your bond. The maximum sum they can seek as a reimbursement is the bond amount you have posted.
Even though the surety may repay the harmed party initially, you are liable to cover all costs related to proven bond claims. This means that it is a wise idea to avoid claims as much as possible. They can be a serious threat to your finances and reputation.
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