What is a Virginia Contractor License Bond?
Construction contractors working in certain cities and municipalities throughout Virginia are required to hold a valid contractor license. As part of the licensing requirements, a Virginia contractor license bond may be necessary. A Virginia contractor license bond is not a statewide requirement but instead varies depending on the county or city where you work as a licensed contractor.
A Virginia contractor license bond is meant to protect customers of your business from fraud or other illegal business activities. If you do not comply with the laws and regulations for contractors, a customer can make a claim against your bond. Claims can be an expensive issue to overcome and they may tarnish your reputation as a contractor.
What Does a Virginia Contractor License Bond Cost?
As a type of surety bond, a Virginia contractor license bond is priced as a percentage of the total bond amount in place. For example, a $10,000 Virginia contractor license bond with a 5% bond premium means you pay $500 for your bond. Bond requirements for contractors vary from one county or municipality to the next, but generally, you can expect to need a bond between $1,000 and $10,000. Bond premiums range from 1 to 10%.
Higher bond premiums for Virginia contractor license bonds are required for contractors who have less than ideal credit history. The surety company providing your bond reviews your financial track record as well as your current business assets and liabilities to determine how much of a risk you are as a bondholder. If issues such as bankruptcy, past bond claims, court judgments, or liens are present, you will pay a higher bond premium than a contractor with healthy credit will.
How Do I Get a Virginia Contractor License Bond?
You can start the process of securing your Virginia contractor license bond by submitting a brief online application. Once your application is reviewed, you are given a quote for your bond cost and information about what you need to do to finalize your bond.