What Is a New York Contractor License Bond?
Different categories of construction contractors in New York need to obtain a contractor license bond, in order to be licensed with local and state authorities.
The goal of license bonds is to protect contractors’ clients from any potential fraudulent actions during the completion of construction jobs. The bond is also a sign of trustworthiness for your construction business.
Your New York contractor license bond works in the same way as other surety bonds. It constitutes a contractual agreement between three parties. Your contractorship is the principal that is required to get bonded. The local or state authority that provides the licensing is the obligee. The surety is the third entity that underwrites the bond.
Questions about Contractor License Bonds
Who needs to post a New York contractor license bond?
Various types of contractors in the state of New York need to get a contractor license bond, so that they are allowed to operate legally in the local or state premises.
For example, New York home improvement specialists are required to get a $20,000 bond. Plumbers and sewer contractors also need to get bonded in certain areas of the state. The best way to know if you need to get a bond and its amount is to check with your licensing authority before you start the licensing process.
The contractor license bond guarantees that you will follow all applicable regulations while performing the contractual work. It also provides a security for your customers that you will complete the projects in time and in good quality.
How much does a New York contractor license bond cost?
The price you need to pay to get your New York contractor license bond depends on the amount you are required to post. Across the different municipalities in the state, the bonding amounts vary in the range of $2,000 to $25,000.
While the bonding amount can be considerable, your bond premium is only a fraction of it. If you qualify for the standard bonding market, the usual bonding rates are between 1% and 5% of the bond amount. For a $20,000 contractor license bond, this means you might end up paying between $200 and $1,000.
How exactly is your bond price set? When you apply for your New York contractor license bond, your surety needs to take a close look at your application. It checks your personal credit score, business financials, assets and liquidity, and experience in the industry. If your overall financial status is solid, you can expect a lower bond premium.
Our surety bond cost page provides a complete overview of how your price is determined.
Can I get bonded with bad credit?
Getting your New York contractor license bond with bad credit can be difficult. That’s why Lance Surety Bonds offers its Bad Credit Surety Bonds program to help contractors with low credit scores, tax liens, bankruptcies, or civil judgements to get the bond they need.
The bad credit bonding option means you need to pay a slightly higher premium. The typical rates are between 5% and 10%. This compensates for the increased risk in bonding you. Still, with us you can be sure you’re getting a top rate. As we work with a number of A-rated, T-listed surety companies, our bonding options are both affordable and completely secure.
How do I get my New York contractor license bond?
Just apply online today for your free New York contractor license bond quote. Afterwards, you’ll need to complete the full application form together with all paperwork, so that you can get your exact bond price.
If you’d like to learn more about how bonding works, you can consult our How to Get Bonded page for an in-depth explanation.
For any concerns or help that you need, you can reach us at (877) 514-5146. Lance Surety Bonds’ specialists will be happy to assist you.
How are bond claims handled for contractors?
It’s important to understand the difference between insurance and surety bonds. While the former protect your business, bonds safeguard the interests of your clients.they guarantee that you will follow all applicable rules in your work.
In case you fail to abide by the law, an affected party has the right to file a claim on your bond. If the case is proven, the surety that has bonded you needs to compensate the claimant up to the penal sum of the bond. Still, you need to reimburse the surety shortly after.
That is why proven claims are problematic for your contractorship and should be avoided. They can ruin the reputation of your business and can prevent you from obtaining the bond you need in the future.