The SB 1432, which became effective on January 1, 2009, amended California’s law for claims toward home improvement contractors. The new law states that a homeowner may make a claim against the contractor’s bond only if the damages happened when the homeowner did not intend on selling the home. The law also makes a change to the time limit of making the claim, based on the contractor’s licensing period.
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California Contractor’s License Bond Amendment
August 17, 2009 by Lisa GrimsleyCategory: Commercial Bonds, Contractor License Bonds, Surety NewsTags: bond requirements, ca, california, contractor, Contractor License Bonds, contractors, legislation, surety bond | Comments (0)
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Understanding the Surety Process
January 17, 2009 by Heidi WolfThe surety underwriting procedure can often be viewed as being an agonizing ordeal for insurance agents as well as applicants needing to obtain bonds. Many times, the entire process can be very aggravating and stressful if an applicant is under a specific deadline or needs a bond very quickly. Here are some items that the surety company will most likely require. It is important to know what crucial information that a surety company or agency will require in order to be approved for any type of surety bond.
Like insurance, the surety industry is recurring. In the mid 90s, the surety industry was very pliable, and there was little underwriting being performed. A combination of the slowing economy and the poor underwriting practices from years prior caused the surety industry to suffer for the first five of five consecutive years in 2000. However, a booming economy led to more bond approvals and issuance, even for applicants that were less than qualified.Fortunately, these losing years caused the market to fluctuate almost overnight underwriting standards were tightened and premiums increased substantially. Capacity quickly became an issue for contractors, particularly at both the small and large ends of the spectrum. Small, emerging contractors were finding it increasingly more difficult to obtain any bonding capacity and large contractors were also feeling the affects of the more stringent industry. The market has fluctuated over the past couple of years, and contract bonds and some commercial bonds can still be difficult to obtain. Some items that are crucial to obtaining prior to applying for a surety bond are:
A surety bond is a form of credit. The underwriter requiring financial information from an applicant is making a credit decision without ever meeting the contractor or applicant.. There may be a substantial amount of paperwork required; however, it may be the extra paperwork required that will get an applicant approved for a bond. An underwriter will most likely request the following:
Business financials It is beneficial and most often a requirement that these are prepared by a CPA. If it is a new company, submitting the most recent business financials will suffice.
Category: Auto Dealer Bonds, Bid Bonds, Commercial Bonds, Contract Bonds, Contractor License Bonds, Court Bonds, General Bonding, Misc. Commerical Bonds, Money Transmitter Bonds, Mortgage Banker Bonds, Mortgage Broker Bonds, Performance Bonds, Subdivision Bonds, Telephone Solicitor Bonds, Title Agency Bonds, Wage & Welfare BondsTags: application process, procedures, surety process, underwriting | Comments (3)
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Compliance Issues for Electrical Contractors Aiding in the Disaster Recovery Efforts in Texas
October 7, 2008 by Michele HaddonIn the aftermath of Hurricane Ike, many out-of-state electrical contractors are traveling into Texas to assist in the disaster recovery efforts. In order to operate in accordance with the law, it is necessary to become familiar with the both the State’s laws and the local ordinances of the municipality that you plan on performing work in.
Electrical Contractors, who have an equivalent license in their own state, are able to quickly obtain an Emergency License issued by the Texas Department of Licensing and Regulation (TDLR). The specific application for this license is available on their website and must be submitted with a copy of your current license and the application fee. An Emergency License can be issued for the following classifications: Master Electrician, Master Sign Electrician, Journeyman Electrician, Journeyman Sign Electrician, Residential Wireman, and Maintenance Electrician. With this license, you must work under another contractor licensed in Texas. The Emergency License is valid for 90 days and will only allow you to perform within the designated disaster area and during the time of a declared disaster and its recovery period.Another quick way to get licensed is to apply for a temporary apprenticeship license. This temporary license would be valid for 21 days – hopefully giving you enough time to obtain your permanent license. Again, you must work under another contractor licensed in Texas.
Be sure to research specific municipality requirements as well. Many cities require contractors to be registered with the municipality. Along with your registration, they may require varying registration fees, additional insurance coverage, and a surety bond.
As an example, here are the licensing requirements for contractors to become registered in the City of Galveston:
• Completed Contractor License Application
• $200.00 Registration Fee
• $300,000 minimum liability insurance listing “City of Galveston� as an additional insured
• $5,000 Surety Bond for permitting/general contractingYou can find their Contractor License Application and other helpful information regarding their requirements on their website:
City of GalvestonThe State of Texas has adopted the NFPA 70 Electrical Code as published in the NEC 2008 Edition. Check with the local code enforcement office in the city you will be performing work in to find out what electrical code requirements they’ve adopted. It is important to learn state and local standards for electrical work because they could differ from your home state.
It is inspiring to hear from so many contractors wishing to help out those who have faced devastation due to natural disasters such as Hurricane Ike. With great intentions in the front of your mind, it is easy to act in haste and overlook the proper steps essential to stay in compliance. Be sure to protect yourself and your company by doing the necessary research and paperwork. This will save you valuable time and money, so you can put more effort towards what really matters – helping those in need.
Category: Commercial Bonds, Contractor License Bonds, Surety NewsTags: contractor, Contractor License Bonds, hurricane, texas, tx | Comments (1)
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Oregon Construction Contractors: Change in Licensing Structure means Change in Bond Requirement
October 6, 2008 by Michele HaddonThe Oregon Construction Contractors Board has changed a requirement for new and renewing licensees in which they must choose an endorsement for their license rather than a licensing category. The endorsements are broken down into either Residential Endorsements or Commercial Endorsements.
The reason for this change is to make it easier for contractors because they would be able to include a range of disciplines under a single license. With over 45,000 licensed contractors in Oregon, this licensing structure also helps the Construction Contractors Board (CCB) to more effectively regulate licensees. Because of this change, the CCB is also requiring licensees to submit their contractor license bonds on a new bond form and for the amount specified according to the endorsement they choose. For those with a Dual Endorsement, two separate bonds will be required – one for residential and another for commercial.
The change was made effective July 1, 2008 for all new licensees. For existing licensees, it will come up when your license renews. If you are unsure of the bond requirement for your license endorsement, refer to the CCB Licensing Endorsement Chart. You can also refer to the renewal notice packet the CCB sends you – they are providing detailed explanations about the endorsements and the new bond requirements. If you believe your license is up for renewal and have not received a renewal notice, you should contact the CCB immediately.
Once you receive your renewal notice from the CCB, be sure to contact your bond agency to have your bond issued on the new bond form. You will need to let them know which endorsement you have chosen – Residential or Commercial, and the bond amount now being required. If you have chosen a Dual Endorsement, let your agent know that you will need both the Residential Contractor Bond and Commercial Contractor Bond.
They should already be familiar with this new bond requirement and will be able to ease you through the transition from your old bond to the new one.If there has not been a significant increase in the bond amount, most sureties will be able to issue the new bond without additional underwriting. In the case that additional underwriting is required, be prepared to provide updated information, especially if the bond amount has increased significantly. These updates could include personal financial statements and/or business financial statements (fiscal year-end and year-to-date). In either case, the process should be fairly easy – with the assistance of the CCB’s Customer Service Unit and your bond agency.
Category: Commercial Bonds, Contractor License Bonds, Surety NewsTags: contractor license, Contractor License Bonds, license bond, OR, Oregon | Comments (0)
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What Is A Bonded Contractor?
December 5, 2007 by Michael WeisbrotHow many times have you heard of a contractor advertising that he or she is “bonded”? Do you know what that means? Most don’t, including the contractors themselves!
What does it mean to be bonded?
When a contractor states they are bonded, they are referring to a surety bond (whether they know it or not). So you may ask, what is a surety bond? A surety bond is promise of performance. It guarantees that the contractor will perform accordingly. However, you will need to find out specifically what their bond is guaranteeing. To do so, you will have to read a copy of the bond, as it will state exactly what the bond is guaranteeing (typically the terms of a license filed with a state or local municipality).How does the bond protect the public?
So what does the bond do if the contractor does not perform properly? It protects the contractor’s clients by paying out an amount up to the total bond amount. However, most bonds do have aggregate language in them. This means that a $10,000 bond can only pay out $10,000 total. So if there are 6 people making $2,000 claims, the bond will not be able to pay all their requested amounts. The surety will then pursue the contractor for repayment of the claim amounts as well as any associated legal fees.How do I get bonded?
Whether you are a contractor or any other profession required to post a bond, the process is the same. First, you must submit an application. Once approved, you will be required to pay your annual premium and sign an agreement (usually) that you hold the surety company harmless in the event of a claim. Once the agency has payment and a signed agreement they can issue the bond to you.Are there any specialty programs available?
Yes there are! As of recent our agency teamed up with some of the nations biggest surety companies to create a specialty contractor license bond program. It allows us to write contractor license bonds at lower rates than our competitors for almost any situation. Whether you have low credit, no credit, bankruptcies, tax liens, bond claims, child support, etc. We can help! Start now by applying online.Category: Commercial Bonds, Contractor License BondsComments (0)
