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Types of Contractor License Bonds
A contractor license bond, often known as a contractor bond, is a type of surety bond that’s often required as part of the licensing process. It guarantees a contractor will operate ethically and comply with local laws and building codes.
Like all types of surety bond, a contractor license bond is an agreement between three parties: the principal (in this case the contractor), the surety company underwriting the bond, and the obligee (generally a state or government body).
If the bond terms are broken, the surety bond can be used to compensate the project owner for any financial loss incurred. This helps to protect the public from unscrupulous business practices and maintain high standards in the construction industry.
There are various types of contractor license bonds available in different states. Common types of contractor license bond include:
- General contractors license
- Home improvement contractor license
- Plumber license
- Electrician license
- HVAC engineer license
Requirements for Getting Contractor License Bonds
There are no set bond requirements for contractor bonds. When applying for your contractor license bond, your bonding company will ask a number of background questions and may require information about your personal and professional finances. They’ll also take a look at your credit score.
The better your personal credit score, the more affordable your bond quote will be. If you have bad credit, you’ll pay a higher bond price, however you should still be able to get bonded if you select a surety company with a bad credit programme. Download a bond application form today to get started.
Common Questions About Contractor License Bonds
If this is your first time getting bonded, you may have some questions about surety bonds, indemnity and liability insurance, and the role they play in the licensing process. To help you understand exactly what a contractor license bond is, and how it affects you, we’re answering some of your most common questions.
Are Contractor License Bonds the Same as Contract Bonds?
Contractor license bonds are different from contract bonds, including performance, payment and bid bonds. It’s a common misconception that the two types of bonds are the same, but it’s important to differentiate between them.
You’ll need a contractor license bond as a part of your licensing process with your local or state authorities. This type of bond is a prerequisite for obtaining the right to operate. It ensures you will act lawfully in your capacity as a licensed contractor.
In contrast, contract bonds are required on a project basis. You may need to get them before bidding on public or private construction projects. They guarantee your performance as a contractor on a specific project.
You may need a different type of contractor license bond depending on the license you want to obtain. The common types include:
- General contractor license bond
- Residential contractor license bond
- HVAC contractor license bond
- Electrical contractor license bond
- Plumbing contractor license bond
- Home improvement contractor license bond
- Roofing contractor license bond
- Landscape contractor license bond
- And others
The type of contractor license bond you’ll have to post also depends on the authority that requires you to get bonded. This means you may need to get a:
- State contractor license bond
- County or municipality contractor license bond
- City contractor license bond
Ready to start your bonding process? Just fill out our online application form for a free, no-obligations bond quote.
How to Get a Contractor License Bond?
Check the Bond Amount Required
The first thing you’ll need to do is check the bond amount required. The amount will vary depending on the type of surety bond you need, your licensing requirements and your location. If you’re unsure of your bond amount, contact the person or organization that requires you to get bonded (the obligee) to find out more.
Fill in Our Online Application
Once you know your bond amount, you can get the bonding process started by filling in our online application form. You’ll need to provide information about your business background and personal finances and tell us which bond you require. We’ll then give you a free quote. If you’re happy with your quote, we can complete the process and get you bonded.
How Much Does a Contractor License Bond Cost?
The bond amount you have to post is determined by your local or state authorities. Your bond cost is a fraction of this amount.
Your surety sets your contractor license bond cost, known as premium, on the basis of your personal and business finances. The most important factor is your personal credit score. The stronger your profile is, the lower your price would be. It’s very rare that a collateral would be required for this type of bond.
While it’s more difficult to get bonded with bad credit, with Lance Surety Bonds, it’s certainly possible. You can use our Bad Credit Program to obtain the contractor license bond you need.
For a full overview of the bond price formation, you can review our detailed How Much Does a Surety Bond Cost? guide.
How Long Does it Take to Get a Contractor License Bond?
If your credit check shows your finances are in good order, and if you have all of your other paperwork and application fee ready to go, you can get bonded within a few days. In some cases, you may even be able to complete the process in a matter of hours.
How Long Does a Contractor License Bond Remain Valid?
Unlike contract bonds, construction bonds and performance bonds which are generally valid for the length of set construction projects, contractor license bonds are linked to the duration of your license. So, if your license application has to be renewed every 12 months, your bond will be valid for one year.
What Are the Consequences of Not Having a Contractor License Bond?
In almost all states, licensed contractors are required to get bonded in order to legally operate. As this is part of license law, you’ll face disciplinary action if you fail to arrange the bond you need. If you’re found to be working without a valid bond, your contractor's state license board (CSLB) may revoke your accreditation. You may also face a fine or even jail time if you fail to stick to the rules and regulations.
If you have more questions about your contractor license bond cost, just call us at (877)-514-5146.
Contractor Licensing Requirements per State
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- Washington, D.C.
- West Virginia
- Wisconsin
- Wyoming
Additional Resources
Contractor License Bonds by State
Select a state
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- Washington, D.C.
- West Virginia
- Wisconsin
- Wyoming
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What Our Clients Have To Say?
Quick response times and turn around for issuing bonds. Great customer service and very knowledgeable. We have used Lance Surety multiple times and have never been disappointed. Highly recommend them and Collette!
Long story short, these guys cut through the B.S. and get the job done. Responsiveness, excellent! Communication, excellent! Respect for their industry partners, excellent! John, Collette, Ryan, you're all-stars! Thank you!
We decided for Lance Surety Bond's quote for 2 reasons; Price and Customer Service. Our Representative Ryan was just SUPERB!! [...] I highly recommend Lance Surety Bond for all your Bonding needs! I'll definitely come back for all of mine. :-) Thanks Ryan!
Quick response times and turn around for issuing bonds. Great customer service and very knowledgeable. We have used Lance Surety multiple times and have never been disappointed. Highly recommend them and Collette!
Long story short, these guys cut through the B.S. and get the job done. Responsiveness, excellent! Communication, excellent! Respect for their industry partners, excellent! John, Collette, Ryan, you're all-stars! Thank you!
We decided for Lance Surety Bond's quote for 2 reasons; Price and Customer Service. Our Representative Ryan was just SUPERB!! [...] I highly recommend Lance Surety Bond for all your Bonding needs! I'll definitely come back for all of mine. :-) Thanks Ryan!