What is an Alabama Contractor License Bond?
In Alabama, there is no statewide requirement for construction contractor licensing. However, each county or municipality where a contractor works may mandate a valid license be in place in order to legally perform projects for customers. In addition to a licensing requirement, an Alabama contractor license bond may be necessary.
Posting an Alabama contractor license bond is a way to help protect customers of a licensed contractor. Should a project fail to be performed in line with local building codes or laws, a customer can file a claim against the bond for compensation. While the surety company initially pays for a bond claim, it is the contractor’s responsibility to repay the claim. For this reason, keeping Alabama contractor license bond claims to a minimum is important to maintaining your contractor business in the state.
Do You Need an Alabama Contractor License Bond?
Each jurisdiction that imposes licensing requirements on contractors in Alabama has specific guidelines for who is required to complete the licensing process. Alabama contractor license bond requirements are also dictated by local governments, so it is important to check with the licensing authority where you plan to perform work as a contractor. Typically, contractors who work in the categories below may need to secure an Alabama contractor license bond:
- Heating and air conditioning
General contractors who do not meet the minimum net worth requirements and complete projects over $50,000 during the year are also required to secure an Alabama contractor license bond on the state level.
Obligee Information for an Alabama Contractor License Bond
In Alabama, local jurisdictions (counties and cities) where the contractor plans to complete contracts act as the licensing and bonding authorities responsible for enforcement and guidelines. The department or division in charge of licensing also acts as the obligee for Alabama contractor license bonds.
However, general contractors that complete work valued at $50,000 or more each year may secure an Alabama contractor license bond instead of meeting the minimum net worth requirements. The obligee for the statewide Alabama contractor license bond is the Alabama Licensing Board for General Contractors. The obligee contact information is as follows:
Licensing Board for General Contractors
2525 Fairlane Drive
Montgomery, Alabama 36116
What Does an Alabama Contractor License Bond Cost?
Bond pricing depends on several different factors, including the total bond amount required. An Alabama contractor license bond of $1,000 may be needed in one jurisdiction, while a bond of at least $25,000 may be required in another. Be sure to check with the local municipality to determine the bond amount you need.
Regardless of the amount of the bond required, licensed contractors do not need to pay the full amount to post a bond. Instead, a bond premium is calculated as a percentage of the total bond. Bond premiums can range from 1 to 10%, depending on your credit history and business financials. You can still get an Alabama contractor license bond with poor credit, but the bond premium you pay will be higher than for someone who has a healthy credit score.
How Do I Get an Alabama Contractor License Bond?
Obtaining your Alabama contractor license bond is a simple process. You can submit a short form to request a quote and start an application online, and you may receive approval quickly once your application details have been reviewed.
Expiration Date and Renewal for Alabama Contractor License Bonds
Depending on the local authority in charge of licensing for your jurisdiction, the expiration date and renewal term for an Alabama contractor license varies. An Alabama contractor license bond has the same expiration date as a license. The surety company providing your Alabama contractor license bond sends details about the renewal process prior to its expiration date.