North Carolina Contractor License Bond

Contractors working in North Carolina do not have a statewide licensing obligation to meet. However, specific cities and counties have licensing requirements for contractors that may include the need for a North Carolina contractor license bond. This type of surety bond provides protection to customers interacting with licensed contractors.

If the contractor fails to comply with local laws and regulations or engages in fraudulent or illegal activities when working on a project, a customer can make a claim against the bond to receive compensation for damages.

A North Carolina contractor license bond is required for licensing in many counties and cities for HVAC, mechanical, refrigeration, electrical, and home improvement projects. You can check the licensing and bonding requirements through the local authority responsible for approving contractor licenses.

Contractor license bonds work similarly to other surety bonds. They are three-party agreements between an obligee, a principal, and a surety.

The Obligee

The obligee is the state or local organization requiring that the contractor post the bond. In North Carolina, this organization will vary because there is no statewide licensing obligation for contractors.

The Principal

The principal is the contractor required to post the bond to become licensed and provide protection for their customers.

The Surety

The surety company gives the bond to the principal and pays any claims made on the bond. The contractor then repays the claims.

Instead of a statewide requirement, North Carolina contractors must look to their local city or county licensing authority to determine if and when a bond is needed. If a North Carolina contractor license bond is required, the local licensing authority is the obligee of the bond.

From a state perspective, some contractors may use a surety bond in lieu of meeting minimum net worth requirements. North Carolina contractor license bonds that fall under this category should submit licensing and bonding details to the Licensing Board for General Contractors as the obligee of the bond.

The board’s contact information is below:

North Carolina Licensing Board for General Contractors

5400 Creedmoor Road

Raleigh, North Carolina 27612

Phone: 919-571-4183

Several types of licensed contractors in North Carolina are required to secure a contractor bond. Some of the most common local licenses that require a surety bond include:

• Building contractors
• Residential contractors
• Commercial contractors
• Electrical, mechanical, or refrigeration contractors
• Plumbing contractors
• Heating or air conditioning contractors

On a state level, a North Carolina contractor license bond is required for landscaping contractors and electrical contractors.

If you have determined the amount of bonding you need to work as a contractor in North Carolina, you can submit a brief online application to start the process. After the surety company evaluates the details of your application, you will receive a bond premium quote to put your North Carolina contractor license bond in place.

The bond amount you need as a licensed contractor varies depending on the type of work you perform and the location of that work. A North Carolina contractor license bond may be as low as $2,500 or as high as $130,000, but you are not responsible for paying the full amount.

As a contractor, you are charged a bond premium, which is calculated as a percentage of the bond and typically ranges from 1 to 10 percent.

When applying for a North Carolina contractor license bond, the surety company providing your bond will determine your bond premium after reviewing your personal credit score and business financial strength.

You can still get bonded with a low credit score, but you will pay a higher premium for your North Carolina contractor license bond. The higher premium is applied for contractors with lower credit because a poor financial history translates to a higher risk for the surety company.

North Carolina contractor license bonds do not have a set expiration date or renewal term. However, the expiration date of a contractor license transfers to the contractor bond, meaning both must be renewed prior to that date.

The surety company providing your North Carolina contractor license bond sends reminders regarding renewal and instructions on how to complete the process.