North Dakota Contractor License Bond

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What Is a North Dakota Contractor License Bond?

Contractors working in the construction industry in North Dakota may need a license before they can work on projects. Part of the licensing process involves posting a North Dakota contractor license bond. This type of surety bond is meant to protect a contractor’s customers from fraudulent or incomplete work.

How Does a North Dakota Contractor License Bond Work?

Surety bonds involve three specific parties in a contractual agreement.

The Obligee

The licensing authority requiring a bond to be in place is known as the obligee of the bond.

The Principal

The principal of a North Dakota contractor license bond is the contractor responsible for posting a bond.

The Surety

The surety company provides the bond on behalf of the principal and initially pays any claims made on the bond.

North Dakota Contractor License Bond Obligee Details

For water well contractors, the state obligee for North Dakota contractor license bonds is the Secretary of State. Local licensing authorities are the obligee of other bonding requirements for North Dakota contractors.

Who Needs a North Dakota Contractor License Bond?

Unlike some other states, North Dakota only has a statewide licensing and bonding requirement for a single type of contractor. Water well contractors must have a license and a surety bond to remain in compliance with state laws.

Local jurisdictions also require construction contractors to have a license and secure a North Dakota contractor license bond, but these requirements only extend to building, mechanical, plumbing, moving, sign hanger, and excavator contractors working in the city of Grand Forks.

To ensure licensing and bonding requirements are met, be sure to check with local licensing authorities before starting work on a project.

How Do You Get a North Dakota Contractor License Bond?

Getting a North Dakota contractor license bond is a simple process. Submit details about the bond amount and type to the surety company, and they will provide a quote for your bond premium. Once the premium is paid, the bond is in place until it’s time for renewal, typically one or two years after it is issued.

How Much Does a North Dakota Contractor License Bond Cost?

Because bond requirements vary for North Dakota contractors, so do the prices of bonds. It is important to recognize that bonding prices are based on the amount of the bond required to be posted and the credit history of the contractor securing the bond.

Bond amounts depend on the type of contractor license you hold. For instance, a water well contractor bond of at least $2,000 must be in place, but a building, mechanical, or plumbing contractor may require a $5,000 bond.

Contractors do not pay the total bond amount. They pay a percentage, known as the bond premium. The percentage is calculated by the surety company providing the bond, and the percentage is based on the bond total and the credit history of the contractor.

Can I Get a North Dakota Contractor License Bond with Bad Credit?

In most cases, bond premiums range from 1 to 10 percent of the bond total. Contractors with bad credit may be approved for a North Dakota contractor license bond, but the bond premium will be on the higher end of that range.

How Do I Renew My North Dakota Contractor License Bond?

Your contractor license bond in North Dakota will typically need to be renewed one or two years after it is issued. You’ll receive a renewal notice from your surety company before your bond becomes invalid. Make sure you keep up with your renewals so that your business documents stay valid.

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Frequently Asked Questions

How much does a bond cost?

Pricing is a percentage of the contractor license bond amount that’s required of you, which is based on your personal credit. Use our bond pricing tool to to get a quick ballpark estimate.

Can I get bonded with bad credit?

Yes. You can apply and get bonded with bad credit. Our agency is the largest writer of bonds in the county, which allows us to approve contractors for bonds when other agencies cannot.

Are these the same as contract bonds?

No. Contractor license bonds ensure you will abide by the laws of your state, city or municipality when performing contracting work. Contract bonds guarantee public projects will be completed properly and are a separate bond type. You can learn more about contract surety bonds by visiting the contractor bond center.

Do I need a state or local bond?

It depends on who is requiring the bond of you, the local municipality, county or state. Depending on your location, it is possible you may need both a local and state bond, as contractor license bond requirements can vary drastically. You can select your state to see a full list of contractor license bond requirements.

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