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.
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.