Contractor License Bonds

Contractors in most states are required to carry a contract license bond in order to become licensed, regardless of their trade. The bond requirements and limits vary. The requiring entity can be the state, county, city, or there may not be a requirement at all depending on the location of the contractor, and the type of work being performed.

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What Does a Contractor Bond Cost?

Contractor license bond prices vary from as low as 50 dollars to thousands of dollars depending on the bond requirement and the surety bond companies underwriting factors. These underwriting factors include the contractor’s personal credit, years in business, classification, current bonding, and license history.

Below are some examples of bond requirements and their related preferred pricing tier.

State/City Bond Examples Bond Amount *Pricing
Monthly | Annual
Abilene, TX - Plumbing License $5,000 $10 | $100
Arizona Residential General License $9,000 $22 | $275
California Contractor License $15,000 $9 | $79
Columbus, OH - Electrical License $25,000 $11 | $125
Florida Contractor License - Division II $10,000 $10 | $100
Greensboro, NC - HVAC License $2,000 $10 | $100
Nevada Contractor License $15,000 $25 | $300
Oregon Commercial Specialty License $50,000 $21 | $250
Washington General License $12,000 $11 | $120
*Prices shown are for a one-year term and are based on several factors including personal credit, license history, years in business, and active license and bonding. Not all available pricing tiers are presented. Rates do not constitute an offer of bonding and are subject to change.

The price offered for a contractor bond is not the most important factor when considering a bond company. Jet has positioned itself as the first direct writer of contractor bonds. Jet’s streamlined process will allow the bond to be purchased instantly and get the bond filed correctly and in a timely manner. It should be noted that with Jet’s efficiency as a direct bond writer, our rate can be often beat out the rest of the market. If another carrier is lower, we will offer that carrier’s bond rate to the contractor.

What Is the Purpose of a Contractor License Bond?

Some states, counties, or cities have a requirement for a contractor to purchase a surety bond in order to be licensed and perform their contractor trade. For the contractor the purpose of the bond is to be allowed to work legally, but for the government entities requiring the bond (known as an obligee in surety terms) the purpose of the bond is to protect the public from the actions of the contractor.

If a licensed contractor breaks their contract or causes financial damage to others, then a claim can be made on their contractor license bond. The bond is a guarantee by the surety company who issued the bond to make the claimant whole or at least make payment up to the maximum limit of the bond.

It is always in the best interest of a contractor to not let a dispute get so far as to have a claim on their bond. If there is a bond payout to a claimant, the contractor will still have to pay the surety company back for the losses. This is part of the statutes of the surety bond no matter the carrier. The fact that a surety bond has to be paid back after a claim is the main difference between a contractor’s surety bond and any other type of insurance.

What Can I Do If I Get a Claim on My Contractor License Bond?

Most contractors have never dealt with a claim and if asked about getting a future claim, they never will. Yet, even the most upstanding contractor might be hired by an unreasonable homeowner and find themselves with a claim against their bond.

A contractor’s best course of action is to contact the claimant and try to reach a resolution, which most likely means getting back on the jobsite and fixing the issue. However, if there is a claim, it is the result of two parties unwilling to find an agreement and the surety company will have to step in.

The surety company will need to contact the contractor in regards to the claim which will start the clock on the surety process. A contractor needs to be communicative and deliver all requested information to the surety in a timely fashion. This will give the contractor the best opportunity to have a frivolous claim denied and avoid increasing legal fees.

If a bond claim payment is made by the surety to the claimant, the contractor still has the responsibility to pay back the surety company the full amount of the bond payout and any incurred legal fees. Should the contractor refuse to pay back the surety company, the contractor would be subject to disciplinary action, such as suspension of the contractor’s license, with their governing licensing department.

What Other Insurances Are Contractors Required to Have?

For every type of risk on the job site there is a related coverage. The contractor license bond is financial protection for the public from contractors. Certain states may have other types of bonds required to perform contracting work.

Any contractor that employs workers must carry workers’ compensation to protect their employees from injury. Most states require the contractor to file proof of coverage.

General liability coverage protects third parties from damages arising from the work done by a contractor. Some states require a policy to be in pace in order to be licensed.

Where Are Contractor License Bonds Required?

Within all states there is a contractor license bond requirement of some kind. Not all classifications of contractors are required to get a bond in certains states and quite often the bonding regulation is enforced by the county or city.

The following list shows a snapshot of the requirements in each state:

State Statewide License Bond Requirement County or City
License/Permit Bond Requirements
Alabama HVAC/Plumbing/Refrigeration/Roofer 99 different requirements
Alaska All Contractor Licenses 1 different requirements
Arizona All Contractor Licenses 7 different requirements
Arkansas Commercial/Plumbing 44 different requirements
California All Contractor Licenses 70 different requirements
Colorado None 39 different requirements
Connecticut None 187 different requirements
Delaware Master Electricial 30 different requirements
District of Columbia Home Improvement/Electrical/Refrigeration/Plumbing None
Florida All Contractor Licenses 160 different requirements
Georgia All Contractor Licenses 100 different requirements
Hawaii None 2 different requirements
Idaho HVAC/Plumbing/Fire Sprinkler/Water Treatment 7 different requirements
Illinois Plumbing/Roofing 368 different requirements
Indiana None 125 different requirements
Iowa Mechanical/Plumbing 72 different requirements
Kansas None 58 different requirements
Kentucky Septic Tank/Roofing 10 different requirements
Louisiana None 29 different requirements
Maine None 6 different requirements
Maryland Home Improvement/Home Builder 76 different requirements
Massachusetts Blasting Operations 119 different requirements
Michigan None 120 different requirements
Minnesota Electrical/Mechanical/Plumbing/Roofer 68 different requirements
Mississippi None 159 different requirements
Missouri None 48 different requirements
Montana None 15 different requirements
Nebraska None 18 different requirements
Nevada All Contractor Licenses 3 different requirements
New Hampshire None 28 different requirements
New Jersey Electrical/HVAC/Plumbing/Elevator 33 different requirements
New Mexico All Contractor Licenses 16 different requirements
New York None 153 different requirements
North Carolina Landscape/Irrigation 85 different requirements
North Dakota All Contractor Licenses 10 different requirements
Ohio Sewage/Private Water 620 different requirements
Oklahoma Mechanical/Electrical/Plumbing/Septic Tank 49 different requirements
Oregon All Contractor Licenses 9 different requirements
Pennslyvania None 122 different requirements
Rhode Island Mechanical/Plumbing/Utility 43 different requirements
South Carolina All Contractor Licenses 22 different requirements
South Dakota None 10 different requirements
Tennessee Home Improvement 77 different requirements
Texas Residential Conservation Service 252 different requirements
Utah All Contractor Licenses 16 different requirements
Vermont None 1 different requirements
Virginia All Contractor Licenses 126 different requirements
Washington All Contractor Licenses 49 different requirements
West Virginia None 3 different requirements
Wisconsin None 64 different requirements
Wyoming None 10 different requirements