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Michigan Contractor License Bond

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What is a Michigan Contractor License Bond?

In many states, licensed contractors working in the construction industry are required to comply with specific regulations in order to operate their businesses legally. One of the mandates that commonly comes with being a licensed contractor is posting a surety bond. In Michigan, some construction contractors must obtain a Michigan contractor license bond as part of the licensing process.

A Michigan contractor license bond is designed to protect the jurisdiction in which the contractor works, as well as the customers or vendors the contractor engages with in the course of doing business. If work on a construction project is not performed well or is left incomplete, a claim against the Michigan contractor license bond may be made.

Who Needs a Michigan Contractor License Bond?

Unlike other states that require all licensed contractors to secure a surety bond, Michigan contractor license bonds are only necessary on a local level. Currently, the city of St. Clair Shores and Oakland County in Michigan are the only two local jurisdictions requiring a Michigan contractor license bond as part of the contractor licensing process. Any individual who performs work that falls under the category of contractor in these two locations must obtain a bond in order to remain compliant with the law.

Michigan Contractor License Bond Obligee Details

As with any surety bond, a Michigan contractor license bond is an agreement between three distinct parties. The contractor required to secure the bond is known as the principal, and the bond is purchased from a surety company. The third party, the obligee, is the local licensing authority mandating a contractor license bond be put in place.

The obligee of a Michigan contractor license bond varies depending on the city or county in which the contractor plans to work. For instance, the St. Clair Shores's Building Department under the Community Development and Inspections Department is the obligee of Michigan contractor license bonds in the jurisdiction.

How Much Does a Michigan Contractor License Bond Cost?

The cost of a Michigan contractor license bond varies from contractor to contractor, depending on a few specific factors. The amount of the bond that must be in place for a licensed contractor can be as low as $1,000, but contractors do not pay this full amount. Instead, the surety company providing the bond calculates the price as a percentage of the bond total. For most contractors, this ranges from 1 to 10%.

The surety company reviews a contractor's credit history to evaluate the financial risk of issuing a bond as part of the process. Contractors who have less than ideal credit are likely to pay a higher bond price than those who have strong credit histories.

How do You Get a Michigan Contractor License Bond?

Licensed contractors who need a Michigan contractor license bond may start the process by filling out a short online quote form with the surety company. After providing information about the bond type and amount, and a review of credit, pricing for the bond is provided, and payment can be made. Michigan contractor license bonds may need to be renewed each year or every few years to remain compliant with licensing regulations.

Frequent Questions

How much does a bond cost?

Pricing is a percentage of the contractor license bond amount that’s required of you, which is based on your personal credit. Use our bond pricing tool to to get a quick ballpark estimate.

Can I get bonded with bad credit?

Yes. You can apply and get bonded with bad credit. Our agency is the largest writer of bonds in the county, which allows us to approve contractors for bonds when other agencies cannot.

Are these the same as contract bonds?

No. Contractor license bonds ensure you will abide by the laws of your state, city or municipality when performing contracting work. Contract bonds guarantee public projects will be completed properly and are a separate bond type. You can learn more about contract surety bonds by visiting the contractor bond center.

Do I need a state or local bond?

It depends on who is requiring the bond of you, the local municipality, county or state. Depending on your location, it is possible you may need both a local and state bond, as contractor license bond requirements can vary drastically. You can select your state to see a full list of contractor license bond requirements.

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Jennifer Henson
Our company has been with JW Surety for several years now so when we needed to obtain a bond for a new company, we immediately went to them for help. Our rep, Melissa, was extremely helpful and prompt which made the process extremely easy for me.
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Trying to get a local Surety Bond was like driving a car on three tires. I searched Surety Bonds and found JW Surety Bonds. I got online and filled out the information and with in 30 minutes received a response from Melissa. She was informative, friendly and helpful. One more super satisfied customer.

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About JW Surety Bonds
We are a family owned and operated agency established in 2003. We started with just two people, and grew to become the largest volume bond producer in the nation with 50+ employees. Since day one, our team focus has been on providing real-time online quotes, an easy process, and the best in claims defense. Learn more about our company.