New Jersey Contractor License Bond

New Jersey is unique in that construction contractors do not have to secure a statewide license in order to perform work legally. However, some municipalities do require contractors to get a license as well as a New Jersey contractor license bond.

A New Jersey contractor license bond is a type of surety bond and a form of insurance for a contractor's customers, not the contractor themself.

If a licensed contractor’s work does not go as planned or it is not in accordance with local codes and regulations, then a claim can be made against the bond. Claims against a New Jersey contractor license bond are meant to cover financial damages incurred by a contractor's customers.

A New Jersey contractor license bond is an agreement between three different parties.

The Obligee

The local licensing authority is listed as the obligee of the bond, or the one mandating a bond be posted by the contractor.

The Principal

The principal is the contractor required to obtain the bond as a form of protection for their customers.

The Surety

The surety company provides the bond to the licensed contractor and pays any claims when they are filed. The contractor then repays the claim amount over time to the surety.

Because bond requirements are set by local licensing authorities and not the state, the obligee of a New Jersey contractor license bond varies from one jurisdiction to the next. Check with the local licensing authority to determine if a bond is required and who is listed as the obligee.

In the state of New Jersey, local licensing agencies dictate which contractors need a license and a corresponding contractor license bond. City contractors working in Jersey City and Ventnor city are required to have a New Jersey contractor license bond, as are street opening contractors working in Burlington.

The state of New Jersey may also require a bond for contractors wishing to become a master plumber or electrician.

To get a New Jersey contractor license bond, contractors should submit a brief application and quote form online. The surety company will need details about the bond amount and the type of bond requested, and in most cases, a quote can be provided in a matter of minutes.

Once the bond is in place and the bond premium paid, contractors should ensure their bond is renewed to stay in compliance with local laws and regulations.

Similar to other types of surety bonds, a New Jersey contractor license bond is priced based on the amount of the bond and the credit history of the principal.

Bonds for contractors in the state may be as low as $4,000, but some may be as high as $15,000, depending on the type of license a contractor holds. The benefit of the surety company is that the licensed contractor does not pay this bond amount out-of-pocket.

The bond price paid by the contractor is known as the bond premium. It is calculated as a percentage of the total bond amount, ranging from 1 to 10 percent in most cases.

The surety company reviews a contractor's credit history and financial track record to determine what the bond premium will be. Contractors with bad credit can still get a New Jersey contractor license bond, but the cost may be higher than someone who has a clean financial past.

Renewal dates for contractor license bonds in New Jersey will vary based on what local municipality issues your bond, but the process for renewal will likely remain the same. Whenever your bond is set to expire, you should receive a renewal notice well in advance. You should send in your renewal application before the expiration date.