What is a Georgia Contractor License Bond?
Any construction contractor working on residential or commercial projects must have a valid license in order to do business in Georgia. In addition, some counties require posting a Georgia contractor license bond before getting a license. A Georgia contractor license bond works as a safeguard for customers and project owners, helping ensure licensed contractors will complete work according to state laws and building codes.
A Georgia contractor license bond involves three different parties: the surety company which provides the bond, the principal which is the licensed contractor, and the obligee, which is the state or local authority requiring a bond to be in place. When a customer or project owner submits a legitimate claim against the bond, the surety company pays compensation to cover financial damages. The contractor, then, repays the claim amount. Because of this structure, it is essential to keep bond claims to a minimum.
What Does a Georgia Contractor License Bond Cost?
A Georgia contractor license bond of either $20,000 or $25,000 is necessary, depending on the type of work performed. However, contractors are not required to pay the full bond amount. Instead, a surety company calculates a bond premium, the cost of the bond, as a percentage of the total. The bond premium you pay typically ranges from 1 to 10%.
The premium you pay for a Georgia contractor license bond depends on your financial track record. The surety company reviews your personal credit score and business financials to evaluate how much risk you pose as a bondholder. If that risk is high, meaning you have a low credit score, you will likely pay a higher bond premium.
How Do I Get a Georgia Contractor License Bond?
You can start the process of securing your Georgia contractor license bond by submitting a brief online application. After your credit score and other application details are reviewed, you receive a quote for your bond premium and information on how to complete the bonding process.