Washington Contractors License Bonds Explained
This surety bond may be a confusing requirement for some contractors applying to get licensed for the first time. It’s a type of contractor’s license bond, acting as a financial guarantee to the state and all customers you enter contracts with.
Depending on what type of license you hold, there are sections of the Contractor’s Registration Act that you are required to be in compliance with. You can find out more below. If you violate any regulations which apply to you, you can face a bond claim.
Continue reading for all the facts, such as bond requirements by license type and tips on reducing your premium. If you still have questions, simply call us at (877)-514-5146.
Frequently Asked Questions
Who needs to post a contractor’s license bond in Washington?
The contractor’s license bond requirements in Washington vary significantly, depending on the type of license you’ll be applying for.
There are statewide requirements for the following contractors to get bonded:
- General contractors
- Specialty contractors
- Electrical contractors
- Telecommunications contractors
- Structural pest inspectors
- Fire system sprinkler contractors
Additionally, there are local bonding requirements for right-of-way and side-sewer contractors in several cities and municipalities.
What is the cost of obtaining a Washington contractors license bond?
The cost of your contractor license bond again depends on your license type. Specialty contractors need to post a $6,000 bond, general contractors– $12,000, and electrical/telecommunication contractors– $4,000.
These amounts refer to the penal sum of the bond, meaning the maximum compensation the contractor may owe to claimants if they violate the bond agreement.
However, to fulfill the bonding requirements, contractors pay only a fraction of that amount, an annual premium. Your premiums depends on a number of factors, but mostly your personal credit score and that of all other owners (if any). Here’s an estimate of your premium based on your credit bracket.
| License Type | Surety Bond Amount | Above 700 | Between 650-699 | Between 600-649 | Below 599 |
|---|---|---|---|---|---|
| Electrical Contractor | $4,000 | $100 | $100 | $100-$200 | $100-$400 |
| Specialty Contractor | $6,000 | $100 | $100-$150 | $150-$300 | $300-$600 |
| Fire Sprinkler System Contractor | $10,000 | $100-$150 | $100-$300 | $250-$500 | $500-$1,000 |
| General Contractor | $12,000 | $100-$180 | $120-$130 | $300-$600 | $600-$1,200 |
In addition to your credit score, there are other factors which can affect your premium. If you can demonstrate strong financials, such as cash-on-hand or other liquid assets, these will most certainly help you obtain a lower cost. The reason is simple: should you trigger a claim, the surety will know that you are financially capable of paying it back. Learn more on the topic on our “What Does a Surety Bond Cost?” page.
What happens if I have bad credit?
As you probably already saw in the table above, the lower your credit score, the higher your premium. Most applicants with a score of below 650 will have to pay between 3% and 10% to get bonded. This is primarily because the surety wants to offset the risk of underwriting bonds for applicants with a low credit score or other credit issues.
However, you can still apply and get your Washington contractor’s license bond. There are only some scenarios, such as having an open bankruptcy or being late on child support payments, that can prevent you from getting bonded. Learn more on our page all about bad credit surety bonds.
How do I apply for a Washington contractors license bond?
The application process isn’t complicated. Simply submit our online application and we will take care of most of the paperwork. Some of these bonds may not even require a credit check, while others may call for financial statements and other documentation.
Regardless of the bond, we have quick processing times, so that you never miss your deadline. The original bond must be submitted within 30 days of receiving the surety’s signature.
How do I renew or cancel my contractor’s license bond?
Renewals for most of these bonds is done on an annual basis. If you got bonded with us, we will send you a notification reminder several times ahead of the expiration date of the bond.
If you wish to cancel you bond, you need to notify the surety with a 45-day written notice. After the cancellation, you lose your licensing rights, but claims can still be made for violations committed while the bond was in effect.
How do I get a Washington contractors license?
Different license types call for slightly different requirements. The website of the Washington Department of Labor and Industries contains the most up-to-date information. Just as a reference, here are some of the steps the licensing process includes:
- Choose a business structure (sole proprietor, LP, LLP, LC, corporation)
- Register with the Secretary of State (includes a $180 filing fee; not required from sole proprietors)
- Obtain a Uniform Business Identifier and an IRS Employer ID
- Get a contractor’s license bond and liability insurance
- Pay the applicable Contractor Registration Fees
After submitting your application, you will hear back from the Department of Labor and Industries within two to four weeks.
What happens in case of a claim?
In order to stay out of claims, it’s essential that you understand the building code and which particular sections apply to your type of contractor license.
Additionally, you should adhere to the terms of all contracts you sign, pay your employees on time (including benefits), and declare all taxes and contributions you owe to the state.
Not all violations will directly lead to a bond claim. Instead, you will be notified of the violation, so that you can correct it. Failure or refusal to do it will result in a claim, which the surety will have to pay for. A bond claim, however, is highly undesirable because not only will you have to reimburse the surety, but your next bond application might be denied as a result of having past claims.
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