Utah Contractors License Bond

You need to contact the Division of Occupational and Professional Licensing to ask if you are subject to a bonding requirement. Residential, small commercial, general engineering, and general building contractors usually need to get bonded, but there other types of contractors who will also need a bond. In fact, more than 30 different classes of trade contractors are subject to bonding requirements in Utah.

The price you pay for your bond depends on several factors. You need to know the total bond amount required from you. Depending on your license type, this amount can be $15,000, $25,000, or $50,000. It refers to the maximum compensation the bond provides to claimants.

Your cost comprises a small percentage of the total bond amount– in most cases, between 1% and 3% if you have good credit. This means a $50,000 contractors license bond quoted at 1% will cost you $500 a year.

Here’s a breakdown of expected premiums based on the applicant’s license type and credit score.

Factors such as your business’s financial strength or your industry experience can also influence your costs, so the best way to find out your exact quote is to submit an online application. You can also visit our “What Does a Surety Bond Cost?” page for more information.

Surety bonds companies are very strict about an applicant’s credit score because it signals a higher risk for them. Some of them may refuse to issue a bond to an applicant because of their credit score, but most of them will agree to it. They offset the risk by providing higher quotes: usually in the 3%-10% range.

Our bad credit surety bonds program ensures that you can get bonded at the lowest possible rate, even if you have bad credit. Working to improve your credit will result in lower premiums over time.

The good news is that you can apply for your bond quickly and securely, using our online application. You’ll be asked to provide some details about your business. The more detailed information you provide, the more precise your quote will be.

Next, you’ll receive a free bond quote from us, along with instructions on how to file and provide the rest of the paperwork. Normally, your bond should be ready within two business days.

You need to renew your bond on an annual basis, which involves not much more than getting a new quote and paying it. We keep a database with renewal deadlines for all our clients, so we’ll make sure you meet your deadline, by sending your several notifications when your expiration date approaches.

If you have exceptionally strong finances, you may submit a request for a release of the bonding requirement. The Division of Occupational and Professional Licensing will want to look at your tax returns, credit report, and financial statements before they make a decision whether to waive the requirement.

The licensing process is not complicated, but you need to make sure you know all the specific requirements for your license type. The best way to do that is to contact the Division of Occupational and Professional Licensing and ask for a checklist. Here are some of the general requirements:

• Buying worker’s compensation insurance if you employ other people
• Successfully passing a pre-licensing test and submitting your score
• Buying General Liability Insurance
• Paying all applicable fees
• Registering your business with the Utah Divisions of Corporations

The Utah contractors license bond protects against different kinds of scenarios. You should take time to understand your obligations well in order to stay out of claims. Usually, claims are filed for the following reasons:

• Not fulfilling your contractual obligations
• Violating applicable building codes
• Failing to pay employees
• Failing to income or self-employment taxes

If a valid claim is made against you, you are legally obliged to make good on it. If you don’t, the surety bonds company will have to provide the compensation, but will then sue you for all expenses incurred.

It’s best to avoid these types of situations as they can severely hurt your business and even lead to the revocation of your license.