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.

Contractor License Bonds
State/City Bond Examples Bond Amount Monthly | Annual
State: Abilene, TX - Plumbing License Bond Amount: $5,000 Monthly | Annual: $10 | $100
State: Arizona Residential General License Bond Amount: $9,000 Monthly | Annual: $22 | $275
State: California Contractor License Bond Amount: $15,000 Monthly | Annual: $9 | $79
State: Columbus, OH - Electrical License Bond Amount: $25,000 Monthly | Annual: $11 | $125
State: Florida Contractor License - Division II Bond Amount: $10,000 Monthly | Annual: $10 | $100
State: Greensboro, NC - HVAC License Bond Amount: $2,000 Monthly | Annual: $10 | $100
State: Nevada Contractor License Bond Amount: $15,000 Monthly | Annual: $25 | $300
State: Oregon Commercial Specialty License Bond Amount: $50,000 Monthly | Annual: $21 | $250
State: Washington General License Bond Amount: $12,000 Monthly | Annual: $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:

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