What is a Delaware Contractor License Bond?
In the state of Delaware, individuals working in the construction business must have a valid license to do so. With the licensing process comes a requirement to secure a Delaware contractor license bond, a type of surety bond. This surety bond provides protection to construction contractor customers and the state should things not go as planned.
If work on a construction project is not performed in line with state rules and regulations, or if the contractor failed to complete a project, a claim can be made against a Delaware contractor license bond. Claims are designed to cover financial losses or damages incurred by the contractor's misconduct or inability to complete the work.
Who Needs a Delaware Contractor License Bond?
The state of Delaware requires specific individuals to obtain a license and a bond if they want to work on construction projects in the state. Resident and non-resident contractors must have a license and a Delaware contractor license bond. Similarly, water drillers, electricians, plumbers, HVAC professionals, and pump installers must also have a license and a surety bond in place.
Delaware Contractor License Bond Obligee Details
A Delaware contractor license bond represents a contractual agreement among different parties. The licensed contractor is known as the principal of the bond, and a surety company provides the bond on behalf of the principal. The obligee is the state licensing authority requiring a bond to be posted as part of the licensing requirements for contractors in the state.
For Delaware licensed contractors, the obligee of a contractor bond is the State of Delaware. The contact information for the obligee is as follows:
State of Delaware
Division of Revenue
PO Box 8750
Wilmington, Delaware 19899
How Much Does a Delaware Contractor License Bond Cost?
Delaware contractor license bonds are priced based on the total amount of the bond required and the financial history of the licensed contractor. Cities and counties in the state dictate the total bond amount required, depending on the type of contractor license you hold. A bond can range from $3,000 up to $200,000, but contractors are not required to pay this amount upfront.
Instead, the surety company charges what is known as a bond premium, based on the total bond amount. A bond premium typically ranges from 1 to 5% of the bond total, and the rate you pay is determined by your credit history. Contractors who have had credit issues in the recent past will pay a higher bond premium than those who have a clean credit history.
How do You Get a Delaware Contractor License Bond?
You can start the process of securing a Delaware contractor license bond by submitting a short quote request online. The surety company needs details about the type of contractor license bond you need, as well as the total bond amount in order to provide an accurate quote. If a credit check is needed, the surety company will provide this information and a quote once the details are reviewed. After paying the bond premium, a Delaware contractor license bond is in place until it needs to be renewed, typically one year after it is issued.
