Michigan Contractor Bonding Requirements
Unlike other states, Michigan doesn’t require all contractors in the state to hold a contractor license bond as a licensure requirement. However, some cities and municipalities may require it from you.
Briefly put, the contractor license bond is designed to act as insurance– not for the contractor, but for the state and the contractor’s clients. It ensures that contractors comply with local building codes and other local or state requirements. A violation can lead to a claim against the contractor, which means they will be liable for a sum up to the total bond amount.
Take a look at the sections below if you want to learn more about this type of bond. For any questions, feel free to contact us at (877)-514-5146.
Frequently Asked Questions
Where do Michigan contractors need to get bonded?
A number of of cities and municipalities can require a contractor to get bonded as an extra precaution. Two of the places with most applications are St. Clair Shores and Oakland County.
St. Clair Shores requires a bond from asphalt, concrete and curb cutter contractors, while in Oakland the bonding requirement applies to some contractors who do public works.
How much does a contractor license bond cost in Michigan?
To find out the cost of getting bonded, you first need to find out your required bond amount. To do that, you need to contact the local authority that mandates the bond.
Once you know your total amount, you can get a quick estimate of your premium if you know your credit score. Applicants with a credit score of 650 or more typically pay between 1%-3% a year, while applicants with a lower score can expect a premium in the range of 3%-10%.
Surety bonds companies evaluate your credit score as a way to assess your likelihood of triggering and making good on claims. However, other factors can also be considered, such as your experience and your financial strength. Learn all about these factors on our “What Does a Surety Bond Cost?” page
Can I get bonded if I have bad credit or credit issues?
Having no credit history, bad credit, or other issues with your credit report will all lead to a higher premium. The good news is that in most cases, they won’t prevent you from getting bond. In our long experience, it’s only applicants with open bankruptcies or late on child support payments are refused a bond.
If you have bad credit and wish to reduce your premium, our experienced agents can help you with building a stronger application. Typically, this may include submitting financial statements, proof of liquid assets and a resume.
Read more about the topic on our bad credit surety bonds page.
What is the application process like?
You needn’t worry about a complicated application. We have made it simple to apply via our online application. It takes just a few minutes to complete, and the more information you provide, the quicker we’ll be able to process it.
We’ll contact you shortly with your free bond quote. If you choose to proceed with your application, we’ll help you complete all the paperwork and your bond should be issued within 1-2 business days.
How do I get a Michigan contractor license?
Other than posting a contractor license bond, you will be required to complete a number of other steps in order to obtain your license. These can vary by location and license type, so make sure you verify with your relevant authority before you start your licensing application.
You will have to:
- Attend 60 hours of education at an approved institutions
- Successfully pass an examination
- Be of good moral character
- Provide all documentation required by the Department of Licensing and Regulatory Affairs
- Pay applicable fees
How are Michigan contractor bond claims handled?
If you violate local building codes or otherwise fail to adhere to the terms of the bond agreement, you might be financially liable. If a claim is filed and it’s valid, you’ll have to pay the claimant. Failing to do it will create more complications, and will violate the terms of the bond. The surety will cover the costs initially but sue you afterwards to get reimbursed.
It’s best to avoid claims as best as you can. Try and settle with the claimant if their claim has solid grounds. If it doesn’t, keep your communication well-documented so you can have sufficient proof to fight the claim when it goes to court.
Still have questions about Michigan contractor bonding? Call us at (877)-514-5146 and we’ll gladly assist you.