What is an Electrical Contractor Bond?
In many states throughout the U.S., the process of obtaining an electrician license requires securing an electrical contractor bond. An electrical contractor bond is a form of contractor bond. It provides some protections to the state licensing authority as well as the contractor’s customers that work will be performed as agreed upon and in line with current regulations and laws.
An electrical contractor bond works like many other surety bonds. There is an obligee, which is the state or local authority requiring the bond, the principal, which is the electrician who must post the bond, and the surety providing the bond. If something goes wrong during a contractual agreement with the electrician, a customer can make a claim for financial losses and damages against the bond. The surety initially pays the cost of legitimate claims, but the licensed electrician is ultimately responsible for repaying the claim amount.
What Does an Electrical Contractor Bond Cost?
As with other contractor bonds, an electrical contractor bond is priced as a percentage of the total bond amount required by the licensing authority. This percentage can range from 1 to 5% for most licensed electricians. As an example, a $10,000 bond with a rate of 3% costs you $300.
When applying for an electrical contractor bond, the surety agency will review your personal credit history and score, as well as details of your business finances. If you don’t have great credit or haven’t been in business long, you can still get an electrical contractor bond. However, the percentage rate you pay will be higher than for someone with excellent credit.
How to Obtain an Electrical Contractor Bond
You can start the process of obtaining the electrical contractor bond you need by submitting a request for a free quote through our short online form.