What Is an Indiana Contractor License Bond?
A number of construction contractors in Indiana need to obtain a contractor license bond, so that they can operate legally. There is no statewide requirement for bonding, so check with your county and city authorities.
The goal of the contractor bonds is to protect the licensing authorities and the contractors’ customers, from potential fraudulent actions during the execution of projects. Being bonded is a sign of trustworthiness for contractors. If your business fails to abide by the law, an affected party can file a claim against your bond.
Your Indiana contractor license bond works just like other surety bonds. It’s a contractual agreement between three entities. Your contractorship is the principal that has to get bonded. The obligee is the local authority that is licensing you and requires the bond. The surety is the entity providing the bond and backing your business.
Questions about Contractor License Bonds
Who needs to obtain an Indiana contractor license bond?
There is no licensing and bonding requirement for Indiana contractors on the state level. Instead, contractors have to check with their local authorities whether they need to undergo a bonding procedure. Some of the cities that include a bond in their Indiana contractor license requirements include Dyer, East Chicago, and Lafayette, among others.
The contractor bond is there to protect the authorities, and contractors’ customers. It guarantees your legal compliance and adherence to the highest professional standards in the industry.
How much does an Indiana contractor license bond cost?
The price of your Indiana contractor license bond depends on the bond amount you are asked to obtain. The amounts vary between cities and municipalities.
The bond premium is only a fraction of the surety bond amount you need. If you qualify for the standard bonding market, the bonding rates are usually between 1% and 5% of the bond amount. For instance, if you need a $10,000 bond, you might end up paying only a $100-$500 premium.
|Bond Type||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Johnson County and Hendricks County contractor license bond||$20,000||$150-$200||$200-$600||$600-$1,000||$1,000-$2,000|
|Beech Grove, Indianapolis, Lebanon, Shelbyville, Southport, and Independence Hill||$10,000||$100-$150||$100-$300||$300-$500||$500-$1,000|
|Munster, Portage and Lawrence contractor license bond (among other cities and counties)||$5,000||$100||$100 - $125||$125-$250||$250-$500|
Your bond price is formulated on the basis of your personal and business financials. Once you apply with a surety, it will examine your personal credit score, as well as look at your business finances, assets and liquidity and industry experience. It needs to assess the risk of getting you bonded. If you are a solid candidate, you can expect a lower bond price.
If you’d like to learn more about how your bond price is set, our surety bond cost page offers a thorough overview.
Can I get bonded with bad credit?
Even if your finances are far from perfect, you can get bonded with us. Lance Surety Bonds operates a Bad Credit Surety Bonds program for contractors with low credit scores, tax liens, bankruptcies, or civil judgements.
Your bond premium is likely to be in the range of 5% to 10%. The higher price compensates for the increased bonding risk. Since we forge close partnerships with a number of A-rated, T-listed surety companies, we can offer you a top bonding rate whatever your credit score is.
How do I apply for my contractor license bond?
It’s easy. You can apply online today for a free Indiana contractor license bond quote. Your exact bond price is available once you fill in and submit a complete bond application.
Need more information? Make sure to check out our How to Get Bonded page for all the details about the bonding process.
Just call us at (877) 514-5146 if you have any further questions. Our bonding specialists will be happy to help you.
What happens in case of a claim?
Your contractor license bond is not insurance for your business, but an extra layer of protection for your customers and local authorities. It’s there to ensure your legal compliance.
In case you fail to abide by applicable rules, an affected party can make a claim on your bond. You may need to reimburse them up to the penal sum of the bond if the claim is proven.
At first, it’s your surety that takes care of the costs. You need to repay it afterwards, which is included in the terms of your bond agreement. This means that bond claims are potentially quite harmful for your contractorship, so it’s wise to avoid them completely.
How do I get an Indiana contractor license?
Since there is no statewide license in Indiana, you have to undergo a licensing procedure with your city or municipality authorities. All contractors in Indiana have to register their business on the state level, though. This is done with the Indiana Secretary of State. The registration costs $30.
For the rest of the licensing requirements, you need to check with your local licensing body. In a number of cases, you’ll have to obtain a contractor license bond, along with meeting the rest of the criteria.