What is a Nebraska Contractor License Bond?
Contractors across several different states are required to hold a valid license in order to perform commercial or residential work. A contractor license also comes with a bonding requirement in many cities and municipalities. In Nebraska, contractors do not have to meet statewide requirements for licensing or bonding, but a Nebraska contractor license bond is necessary for those who work in the City of Omaha.
A Nebraska contractor license bond is a surety bond that protects customers from fraudulent or illegal business practices and ensures licensed contractors will perform in line with local construction codes. This type of bond involves three parties – a principal, which is the licensed contractor, an obligee, which is the City of Omaha that requires the bond, and a surety company which provides the bond.
If a customer experiences a financial loss due to a violation of local laws and regulations, a claim can be made against your Nebraska contractor license bond.
What Does a Nebraska Contractor License Bond Cost?
The City of Omaha requires a $10,000 bond to be obtained by licensed contractors, but you are not responsible for paying the entire bond amount. Instead, a Nebraska contractor license bond is priced as a percentage of the total, typically between 1 and 3%. Bond applicants with strong credit history pay a lower percent of the bond amount, while contractors with bad credit can pay as high as 10%.
A surety company reviews your personal credit as part of the application process because a Nebraska contractor license bond is a form of credit extended to your business. When a valid claim is made, the surety compensates the customer but you are responsible for repaying the claim. Bad credit, including bankruptcy, court judgments, or liens, makes you a higher risk to the surety. Therefore, the cost of your Nebraska contractor license bond is higher.
How Do I Get a Nebraska Contractor License Bond?
You can start the process of obtaining your Nebraska contractor license bond by submitting a short quote request and application online.