What is an Illinois Contractor License Bond?
In the state of Illinois, many types of contractors are required to have a license to do business. When a license is necessary, an Illinois contractor license bond may also be a requirement. An Illinois contractor license bond is a form of security posted by the contractor to ensure compliance with state and local laws in the construction industry.
Three parties are involved in an Illinois contractor license bond agreement: the principal, which is the licensed contractor required to post a bond; the surety company that provides the bond and pays claims on behalf of the contractor; and the obligee which is the state or local authority requiring a bond to be put in place. Claims made against the bond are paid by the surety initially, but licensed contractors repay successful claims.
What Does an Illinois Contractor License Bond Cost?
The Illinois contractor license bond you need varies based on where the work will be performed and the type of license you hold. Limited license contractors require a $10,000 bond, while unlimited contractors may have to post a $25,000 bond. General contractors throughout the state may need a $5,000 to $50,000 bond, depending on local licensing requirements.
Fortunately, you do not pay the entire amount of the bond. Surety companies price Illinois contractor license bonds as a percentage of the total bond requirement, ranging from 1 to 10%. For contractors with strong credit scores, the bond premium is closer to 1 to 3%, while contractors with poor credit pay a higher percentage.
How Do I Get an Illinois Contractor License Bond?
If you are ready to secure an Illinois contractor license bond, you can submit a quote request and short application online. The surety company will review your personal credit details along with your application to determine your bond premium. Once you have this information, you can move forward to finalize the bond.