What is a Virginia Contractor License Bond?
Construction contractors working in certain cities and municipalities throughout Virginia are required to hold a valid contractor license. As part of the licensing requirements, a Virginia contractor license bond may be necessary. A Virginia contractor license bond is not a statewide requirement but instead varies depending on the county or city where you work as a licensed contractor.
A Virginia contractor license bond is meant to protect customers of your business from fraud or other illegal business activities. If you do not comply with the laws and regulations for contractors, a customer can make a claim against your bond. Claims can be an expensive issue to overcome and they may tarnish your reputation as a contractor.
Who is Required to Get a Virginia Contractor Bond?
Under the revised state law and the Virginia Board for Contractors, licensed contractors who fall into Class A or Class B categories may be required to secure a Virginia contractor license bond. Class A contractors are individuals working on projects valued at more than $120,000 or those who, in the past 12 months, worked on contractors worth $75,000 or more.
Class B contractors in Virginia are individuals who work on contractors valued between $10,000 and $120,000, or those who have worked on projects valued between $150,000 and $750,000 in the last 12 months.
Class C contractors are exempt from the statewide contractor license bond requirements. However, it is essential to check with your local licensing authority to determine if a Virginia contractor license bond is necessary in order to comply with local laws and regulations.
Virginia Contractor License Bond Obligee Details
Although Virginia contractor license bond requirements can be mandated by local governments and municipalities, a new law went into effect in 2017, creating a statewide bond requirement for Virginia contractors. Now, specific contractors working in Virginia must secure a Virginia Board for Contractors bond of $50,000 if they do not meet or choose not to qualify for licensing under net worth minimum requirements.
The board acts as the obligee for Virginia contractor license bonds issued to contractors. The Virginia Board for Contractors is a division of the Department of Professional and Occupational Regulation, with the following contact information:
Commonwealth of Virginia
Department of Professional and Occupational Regulation
9960 Maryland Drive, Suite 400
Richmond, Virginia 23233
What Does a Virginia Contractor License Bond Cost?
As a type of surety bond, a Virginia contractor license bond is priced as a percentage of the total bond amount in place. For example, a $10,000 Virginia contractor license bond with a 5% bond premium means you pay $500 for your bond. Bond requirements for contractors vary from one county or municipality to the next, but generally, you can expect to need a bond between $1,000 and $10,000. Bond premiums range from 1 to 10%.
Higher bond premiums for Virginia contractor license bonds are required for contractors who have less than ideal credit history. The surety company providing your bond reviews your financial track record as well as your current business assets and liabilities to determine how much of a risk you are as a bondholder. If issues such as bankruptcy, past bond claims, court judgments, or liens are present, you will pay a higher bond premium than a contractor with healthy credit will.
How Do I Get a Virginia Contractor License Bond?
You can start the process of securing your Virginia contractor license bond by submitting a brief online application. Once your application is reviewed, you are given a quote for your bond cost and information about what you need to do to finalize your bond.
Renewal Term and Expiration Date for Virginia Contractor License Bonds
Most contractor licenses in Virginia expire two years from the date they were issued. Virginia contractor license bonds have the same expiration date as a contractor’s license, and therefore must be renewed at the same time. The surety company providing the bond send renewal information in advance of the expiration date to make for a seamless, timely renewal.