Contractor License Bond Guide
Why do you need a contractor license bond?
You need to obtain a bond for your contractor business to protect your clients. If you break municipality, city or state laws, a claim can be made against your bond. For example, if you perform defective work on one of your customers homes, a claim can be filed.
Yes. You can apply and get bonded with bad credit. Our agency is the largest writer of bonds in the county, which allows us to approve contractors for bonds when other agencies cannot.
No. Contractor license bonds ensure you will abide by the laws of your state, city or municipality when performing contracting work. Contract bonds guarantee public projects will be completed properly and are a separate bond type. You can learn more about contract surety bonds by visiting the contract bond center.
It depends on who is requiring the bond of you, the local municipality, county or state. Depending on your location, it is possible you may need both a local and state contractor license bond, as contractor license bond requirements can vary drastically. You can select your state to see a full list of contractor license bond requirements.
Each state has its own bonding requirements. Some have stringent rules along with a bond requirement, while others have no contractor license bonding requirements at all. You can see the full list of state requirements to start your research, but check with your local and state governments to see what requirements you have to fulfill to become a licensed contractor.
No, but they are similar. Both bond types allow you to perform contracting work and guarantee you will follow the terms of your license. However, contractor license payment & performance bonds also guarantee that you will pay subcontractors and that your work will be completed properly.
A compliance contractor license bond only ensures you will follow the rules of your license; it does not guarantee payment to subs or work performance and often does not require a credit check.
Surety Bonds do not protect you
The bond is a form of insurance for your clients, which is why many businesses proudly list that they are bonded on their marketing material. However, you will be required to reimburse the bonding company should a claim be paid out.
Fidelity Bonds protect your business
You can protect your business from employee theft and fraud by purchasing a fidelity bond. You can read more in our fidelity bond section.
Step 1: Select a state
Step 2: Choose Your Bond
Step 3: Review Licensing
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