Nevada Contractors License Bond Requirements
The Nevada State Contractors Board requires that all contractors in the state obtain a contractor license bond as part of their licensing application process. The contractor license bond is a surety bond acting as a protection to their customers as well as the state.
Every contractor needs to comply with the Nevada Revised Statutes, Chapter 624, or face a claim against their bond. Contractors are legally responsible for making good on all valid claims. There can be many reasons for a claim, so it’s important that you understand your contractual obligations well. Here are some actions that could warrant a claim:
- Misusing client funds
- Not keeping accurate financial records
- Violating your local or state building code
- Failing to provide compensation to employees
If you wish to learn more about contractor bonds in the state of Nevada, continue exploring the sections below. If you still have questions, do not hesitate to call us at (877)-514-5146.
Questions about Contractor License Bonds in Nevada
- How much does a Nevada contractors license bond cost?
- What happens if I have bad credit?
- What is the application process like?
- How do I renew my bond?
- Is there an alternative to the Nevada contractors license bond?
- How do I apply for a Nevada contractors license?
- How can I stay of out of claims?
- Are there additional bonding requirements for Nevada contractors?
How much does a Nevada contractors license bond cost?
Bond amounts can vary between $1,000 and $500,000. The Nevada State Contractors Board sets the exact amount after an evaluation of your business’s financial stability, experience in the field and monetary limit granted. Bond amounts can vary by license type as well.
However, these bond amounts are not your actual surety bond cost. They represent the maximum compensation that can be awarded to claimants. To get bonded, you need to pay a premium once every 2 years. The premium is usually 1%-3% of the total bond amount, but can go up for applicants with bad credit.
To use an example, a $10,000 surety bond quoted at 1% will cost you just $200 for the two-year duration of the bond.
The most important determinant of your premium is your personal credit score, followed by your financial stability and industry experience.
What happens if I have bad credit?
Bad credit applicants can still get bonded. Since personal credit score is very important to the underwriting process, they are always required to pay higher premiums to compensate for the higher risk associated with their bond.
Our bad credit program allows us to negotiate lower prices on your behalf, so your premiums will most likely stay within the 3%-10% range. If you improve your credit score, it can even lower your premium when you need to renew your bond in two years.
What is the application process like?
The application process is simple. After you contact the Contractors Board and verify your required bond amount, you can submit our online application.
You’ll be contacted by one of our agents who will give you a free bond quote, and let you know what else we need in order to process your application. Contractor license bonds in Nevada are usually subject to underwriting scrutiny, so you’ll need to submit personal and business financial statements, and sign an indemnity agreement with the bonding company.
Once we receiving everything we need, it usually takes us 1-2 business days to have your bond form signed by the surety. You will then receive the original by mail. We can also mail or fax you digital copy. For your reference, here’s the bond form below:
How do I renew my bond?
Remember, your contractors license bonds needs to be renewed every two years, and the renewal needs to be done prior to the bonds’ expiration date or your license will no longer be valid. The renewal process is easy, and if you work with us, we will make sure you meet the deadline by sending you several renewal reminders ahead of time.
Is there an alternative to the Nevada contractors license bond?
Yes, there is. Contractors in Nevada are allowed to post a cash deposit in lieu of the bond. However, we don’t recommend this option for a number of reasons.
The first reason is because the cash deposit must equal the full bond amount that’s required of you, which ties up a great deal of liquidity. Plus, if you choose this option, your expenses don’t end there. You’ll be charged a $200 administrative fee every two years, but you won’t have any of the protections that a surety bond offers. Finally, the Nevada State Contractors Board will keep your cash locked for years after you terminate your license or deposit.
How do I apply for a Nevada contractors license?
There are a number of requirements you need to satisfy to get your Nevada contractors license. The most up-to-date place to get all the necessary information is the website of the Nevada State Contractors Board. Here are some of the requirements:
- Choose your classification:
- Class A: General Engineering Contractor
- Class B: General Building Contractor
- Class C: Specialty Contractor
- Provide financial statements
- Submit criminal background check
- Register with the Nevada Secretary of State (for corporations, LPs and LLCs)
- Pay a $300 nonrefundable fee
- Pass a licensing test
How can I stay of out of claims?
There are number of scenarios that can lead to a claim against your contractors license bond. To make sure you stay compliant with the law, read Chapter 624 of the Nevada Revised Statutes. People or entities that can file a bond claims include:
- Property owners
- Anyone injured by an unlawful act or omission on part of the contractor
If a claim is made against you, you need to make good on it. If you fail to do so, the surety bonds company is obligated to step in. They will compensate the claimant, but will seek reimbursement from you.
Are there additional bonding requirements for Nevada contractors?
Yes, pool and spa contractors are subject to a few additional bonding requirements. If you work on residential pools and spas, the Contractors Board will require that you post an additional contractors license bond, in amounts between $10,000 and $400,000. Unlike the bond you post for your license, this one is solely designed for consumer protection.
In some circumstances, pool and spa contractors may even need to post a performance bond and a payment bond in amounts no less than 50% of the total contract amount. The performance bond is for the protection of the project owner, while the payment bond guarantees subcontractors, laborers and material suppliers will get timely compensation.