What is a home improvement bond?
If you want to become a home improvement contractor, a number of businesses will require you to post a surety bond called a home improvement bond. Its provisions can vary slightly based on your location, but the purpose of the bond is generally to protect your clients, and ensure your business respects building codes and all applicable local regulations.
If you have been found to be in violation of your bond agreement, you can face a bond claim which will serve as compensation to the claimant. The maximum sum of the claim cannot exceed the total amount of your bond.
You can start your application now, or continue reading for more information about bonding costs and home improvement bonds in specific states.
Questions about Home Improvement Bond
How much does a home improvement bond cost?
Your bond cost is a percentage of the total bond amount required. The total amount is the bond’s penal sum, i.e. the maximum amount that can be awarded to a claimant. Each state determines the total bond amount it requires.
Out of that amount, you pay a premium, usually once a year or once every two years. For applicants with good credit, the premium is most often between 1% and 3%. The table below contains information about home improvement bond amounts by state, as well as expected premiums based on credit score.
|Type of Bond||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Tennessee Home Improvement Bond||$10,000||$100||$100-$300||$250-$500||$500-$1,000|
|Maryland and New York Home Improvement Bond||$20,000||$150-$300||$200-$600||$500-$1,000||$1,000-$2,000|
|Indiana Home Supplier Bond and Washington D.C Home Improvement Bond||$25,000||$188-$375||$250-$750||$625-$1,250||$1,250-$2,500|
These estimates are provided based on credit score alone. However, the underwriting process can include other factors such as your financial strength or your experience in the industry. Our “What Does a Surety Bond Cost?” page contains more information on the topic.
Can I get a home improvement bond with bad credit?
Yes, you can still get bonded with bad credit– though at a slightly higher premium. The table above can provide you with an estimation, but in general, you can expect to pay between 2.5% and 10% of the total amount required.
Lance Surety Bonds has expertise in underwriting surety bonds for applicants with bad credit, so you can rely on us to negotiate the best rate on your behalf.
How do I apply for a home improvement bond?
The application process is simply. All you need to do is complete our online application, and we’ll contact you with your personal bond quote. We offer fast turnaround, so in normal circumstances, your bond should be issued within two business days.
You’ll receive the original bond form, signed by the surety bonds company, via mail. You’ll need to use it as part of your licensing applications, but you can request copies via fax or email.
If you need any help with your application, feel free to call us at (877)-514-5146.
What happens in case of a bond claim?
Bond claims can be very unpleasant because they can cost you a lot of time and resources. If a claimant files a valid claim, you are obliged to make good on it or face legal consequences. A history of past claims can hurt your business in other ways, because most bonding companies are unwilling to underwrite bonds for applicants with past claims.
To make sure you stay out of claims, you need to know in detail the home improvement bond requirements in your state. Here’s an outline of important requirements in several states.
The home improvement bond requirement is not statewide, but currently applies to the following counties: Bradley, Davidson, Haywood, Hamilton, Knox, Marion, Robertson, Rutherford, and Shelby.
The bond is required for work on projects valued between $3,000 and $25,000. If your project value exceeds $25,000 you will need a contractor license. Your obligations under the bond are outlined in T.C.A. 62-6-501.
Home improvement contractors in Putnam County and New York City need to post home improvement bonds. The amounts are $20,000 for NYC and $25,000 for Putnam County.
There are a number of laws that you need to comply with when you work as a home improvement contractor in the city of New York, including the Consumer Protection Law.
Home improvement contractors in the capital must post a $25,000 bond once every two years. According to the bond language, they must “comply with the provisions of the Acts of Congress approved July 1, 1932, 47 Stat. 550 as amended, and September 6, 1960, 74 Stat. 815, and the Home Improvement Business Regulations and any amendments thereto made or which may be hereafter made.”
The Washington, D.C., home improvement bond form should be signed in the presence of two witnesses.
Maryland home improvement bonds also have two-year terms. Contractors are required to comply with the Annotated Code of Maryland, Business Regulation Article, Title 8.
Among other things, you are required to clearly specify the price of the contract and cannot collect fees ahead of signing it. You are also obliged to provide the client with a copy of the contract before your begin working on the project.