The Arizona Registrar of Contractors enforces the contractor license bond requirement for the State of Arizona. Contractor bonds guarantee financial compensation to a consumer or vendor affected by a contractor’s misconduct. These surety bond limits vary from $2,500 to $100,000.
APPLY NOWArizona has a variety of contractor bond limits depending on the classification of work performed; residential, commercial, general, and/or specialty. Also used to determine bond limit is the total cost of the work they expect to do over a year.
Two factors play a major role in the price of the quote for an Arizona contractor license bond: personal credit and the bond limit required. Years in business, bonding, and license history also will affect eligibility and pricing. Approved quotes will vary from 1-10% of the bond limit needed.
| Preferred Bond Price* | ||
|---|---|---|
| Bond Name | Bond Limit | Price* |
| Bond Name: Residential General Contractors- less than $750,000 | Bond Limit: $9,000 | Price: $270 |
| Bond Name: Residential General Contractors - $750,000+ | Bond Limit: $15,000 | Price: $450 |
| Bond Name: Residential Specialty Contractors - less than $375,000 | Bond Limit: $4,250 | Price: $128 |
| Bond Name: Residential Specialty Contractors $375,000+ | Bond Limit: $7,500 | Price: $225 |
| Bond Name: Commercial General Contractors -$150,000 or less | Bond Limit: $5,000 | Price: $50 |
| Bond Name: Commercial General Contractors - $150,000-500,000 | Bond Limit: $15,000 | Price: $150 |
| Bond Name: Commercial General Contractors - $500,000-1 mil | Bond Limit: $25,000 | Price: $250 |
| Bond Name: Commercial General Contractors - $1 mil-5 mil | Bond Limit: $50,000 | Price: $500 |
| Bond Name: Commercial General Contractors - $5 mil-10 mil | Bond Limit: $75,000 | Price: $750 |
| Bond Name: Commercial General Contractors - over $10 mil | Bond Limit: $100,000 | Price: $1,000 |
| Bond Name: Commercial Specialty Contractors - $150,000 or less | Bond Limit: $2,500 | Price: $50 |
| Bond Name: Commercial Specialty Contractors - $150,000-500,000 | Bond Limit: $7,000 | Price: $70 |
| Bond Name: Commercial Specialty Contractors - $500,000-1 mil | Bond Limit: $17,500 | Price: $175 |
| Bond Name: Commercial Specialty Contractors - $1 mil-5 mil | Bond Limit: $25,000 | Price: $250 |
| Bond Name: Commercial Specialty Contractors - $5 mil-10 mil | Bond Limit: $37,500 | Price: $375 |
| Bond Name: Commercial Specialty Contractors - over $10 mil | Bond Limit: $50,000 | Price: $500 |
Surety bond premiums for contractors performing a combination of the classification presented in the chart will be a sum of the premiums for each individual class. For example, a contractor performing residential and commercial specialty work at $150,000 a year would pay a bond premium of $150 upon approval.
Contractor license bonds are required for good reason, as they protect the public from contractor wrongdoings. The customer or governing entity can ensure they are covered in the event they take a financial hit due to a contractor’s actions.
Contractors may have a claim filed on their bond for various reasons. Some examples include: not delivering work according to the contract, completing a project that is structurally unsafe, or leaving remnants of chemicals on the job site that could affect people’s health.
If a claim does arise, and is proved legitimate, the surety company will pay out for the amount of the claim. It is then contractor’s responsibility to pay the surety company back for the full amount paid out as well as any legal fees.
Contractors may want to purchase a general liability insurance policy which covers third-party injuries and damages. Even though this is not a requirement for all contractors, many customers will request that the contractor secures this coverage, and it is also to the benefit of the contractor.
If a contractor has full-time employees, they are required to hold a workers’ compensation policy. This will cover employee injuries and/or sickness caused by the job.
City and county bonds may also be required on certain public works projects. This is to guarantee the contractor’s performance throughout the duration of the contract.