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.Apply Now
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||
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|
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.
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.
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.
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.
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|