Indiana Contractor License Bond

Construction contractors working in Indiana do not have to meet a statewide requirement for licensing. However, certain counties and municipalities in the state require contractors to hold a valid license before they can perform commercial or residential work. Part of the licensing requirement is posting an Indiana contractor license bond.

An Indiana contractor license bond is a surety bond that works to safeguard customers from illegal and fraudulent business practices which may cause them financial harm. A surety company provides the bond to the contractor, and the amount of the bond necessary is mandated by the obligee, or the city or county in charge of contractor licensing. When a claim is made against an Indiana contractor license bond, the surety pays the claim initially. However, the contractor repays this amount over time.

Requirements for licensing as a contractor working in Indiana differ from city to city, as do bonding requirements to accompany a license. However, some of the more common Indiana contractor license bond categories include:

• Carpentry or structural contractors
• Electrical contractors
• Plumbing contractors
• Heating and air conditioning contractors
• Concrete contractors
• General contractors for construction projects, residential or commercial

Contractors operating in Indiana do not have a statewide licensing process to complete. Instead, each license is issued by the city or county where the contractor plans to do business. This licensing authority dictates whether an Indiana contractor license bond is necessary, and if so, the agency or department responsible for acting as the obligee of the bond.

As an example, contractors licensed in Indianapolis submit their Indiana contractor license bond information to the Department of Business and Neighborhood Services for the city of Indianapolis. Check with your local licensing authority to determine the obligee of your Indiana contractor license bond.

Bond requirements vary from one location to the next, but an Indiana contractor license bond may be as little as $5,000 and as high as $20,000. Fortunately, contractors are not required to pay this entire amount. Instead, bonds are priced as a percentage of the total bond amount, called a bond premium. The bond premium you pay is between 1 and 10% of the bond requirement, based on several different factors.

The surety company providing your Indiana contractor license bond reviews your personal credit score and business financials to determine your bond premium. When credit is poor, you pay a higher bond premium than contractors who have a strong financial track record. This is because bad credit indicates the bondholder may be a higher risk for a bond claim in the future.

You can start the process of getting your Indiana contractor license bond by submitting a brief form online. Your surety agency provides your bond premium and the steps you need to take in order to secure your bond.

Because Indiana contractor licenses are issued by cities and counties in the state, different expiration dates and renewal terms exist for each contractor. For example, an Indianapolis contractor license may be issued for one, two, or three years, but each expires on December 31.

Other cities have one-year licenses that expire 12 months from the date of issuance, without a specific expiration date. An Indiana contractor license bond has the same expiration date as a contractor license, so it is important to under your specific license terms. Your surety company provides information about how to renew your bond ahead of its expiration date so you can maintain compliance with local regulations.