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Virginia Contractor License Bond
Virginia requires Class A and B contractors to either submit financial statements verifying their net worth or obtain a $50,000 surety bond as a prerequisite to obtaining a professional license. The bond protects home owners and property owners’ associations in the event the contractor violates the provisions outlined in Virginia Code Chapter 11, Title 54.1.
Jet Surety writes Virginia Contractor License Bonds for as low as $399 for a two year term, or you can pay just $23 per month.
The above application is for Class A and B Contractor License Bonds. If you need a local Virginia Contractor License/Permit Bond, apply here.
We provide qualified contractors with the lowest market rates.
Other surety companies simply run generic credit checks to determine eligibility and pricing, allowing unqualified applicants to secure coverage while forcing the remaining contractors to subsidize their rates with inflated premiums.
Our underwriting weeds out the small percentage of bad applicants that cause all of the claims, ensuring reputable contractors do not overpay.
Don’t subsidize your competition. Get a quote today by filling out the above application.
How Much Does a Virginia Contractor License Bond Cost?
Rates start at $399 for a two year term, or you can pay $23 per month.
If you received a lower quote elsewhere, send it to us and we can likely beat it. Our goal is to offer every qualified contractor that passes our underwriting the lowest market rate.
| Monthly | 2 year |
|---|---|
| $23 | 399 |
Can I Obtain a Bond With Bad Credit?
Yes, while the owner’s credit score does play a factor in determining the bond’s price, we also employ proprietary underwriting practices that examine industry specific criteria, allowing us to offer lower rates to all qualified applicants, regardless of credit history.
How do Monthly Payments Work?
Qualified contractors have the option to pay for their bonds on a month to month basis.
Whereas most premium financing options require a hefty down payment and include financing fees, our monthly subscription option allows you to pay as you go, does not require a down payment and allows you to cancel at any time at no cost.
Who Needs a Virginia Contractor License Bond?
All Class A and B contractors in Virginia that do not meet the minimum net worth requirements or do not wish to submit financial statements verifying their net worth are required to purchase and maintain a $50,000 contractor license bond.
Virginia Statute 54.1-1103 requires all contractors operating in the state to obtain a license with the Department of Professional and Occupational Regulation (DPOR).
Contractor licenses issued by the DPOR are broken down into three distinct classes.
- Class A - Can undertake jobs of any size with no annual cap
- Class B - Can only undertake jobs costing $150,000 or less and the total cost of all projects undertaken within a 12 month period cannot exceed $1 million
- Class C - Can undertake jobs costing up to $30,000 and the total cost of all jobs undertaken in a 12 month period cannot exceed $250,000
| License Class | Project Limit | Net Worth Requirement |
|---|---|---|
| A | Unlimited | $45,000 |
| B | $150,000 per job $1 million annual | $15,000 |
| C | $30,000 per job $250,000 annual | None |
Class A contractors must maintain a minimum net worth/equity (total assets - total liabilities) of at least $45,000. Class B contractors must have a net worth/equity of at least $15,000. To verify their net worth/equity, contractors are required to submit either a completed Financial Statement Form (along with any supporting documentation) or the results of a review/audit conducted by a Certified Public Accountant (CPA).
In lieu of providing financial statements, contractors can purchase the bond instead.
Financial Statements vs Surety Bond
Obtaining a contractor license bond is significantly cheaper than undergoing a CPA audit/review, with the cost of these services often exceeding tens of thousands of dollars. These processes also take time, with reviews typically lasting for multiple weeks and audits for multiple months. This is a stark contrast with obtaining a bond, which can be accomplished in a few minutes at a fraction of the cost.
Opting to purchase a bond also protects your privacy, as you do not need to disclose detailed financial information to secure coverage. Additionally, submitting financials opens your business up to more scrutiny and may require additional back and forth with the DPOR if they have questions regarding the documents submitted.
| Qualifying Method | Cost | Time | Privacy |
|---|---|---|---|
| CPA Audit/Review | $10,000 - $30,000 | Weeks to Multiple Months | Full disclosure of business financials |
| Financial Statements | $0 - $1,000 | Up to multiple days | Full disclosure of business financials |
| Surety Bond | $399 | Minutes | No financial review required |
If you are an established business that already has up to date CPA audited or reviewed financials that you do not mind being scrutinized by the DPOR, then it makes sense to qualify for licensure with financial statements. However, if you do not already have prepared financial statements, or do but do not wish to disclose them, then it makes more sense to purchase a bond.
What Does the Virginia Contractor License Bond Cover?
The Virginia legislature enacted the bond requirement to protect homeowners and property owners’ associations in the event a contractor engages in improper or dishonest conduct in violation of Virginia Code Chapter 11, Title 54.1.
For example, the bond protects qualified claimants if a contractor performs inadequate work, abandons a job, violates building codes or otherwise fails to adhere to the terms of a contract.
The bond acts as a last resort in the event a contractor fails to satisfy any judgments issued against them by a court of law in favor of qualified claimants.
Who Can File a Claim Against a Virginia Contractor License Bond?
Virginia Statute 54.1-1120 limits who can file a claim against the bond to home owners who hired the contractor to perform work on their residence or property owners’ associations that hired the contractor to perform work on common areas owned by the association.
Claimants cannot be:
- An employee of the contractor
- A vendor
- Another licensed contractor
- The contractor’s spouse or child or their employee
- A financial or lending institution involved in the construction of real property
Prior to submitting a claim against the bond, claimants must first obtain a judgment, or a judgment confirming an arbitration award, against the contractor issued by a Virginia court in which no further right of appeal exists.
In layman's terms, homeowners and property owners’ associations must sue the contractor, win and allow the contractor to exhaust all appeals before filing a claim. Additionally, claimants must also make a reasonable attempt to discern if the contractor holds any assets that may be used to satisfy the judgment, and exhaust all legal remedies to sell and obtain the proceeds from those assets prior to filing a claim.
Claimants have 12 months from the date the judgment is awarded to file a claim against the bond.
How Do Virginia Contractors File Their Bonds?
Virginia contractors can email an electronic copy of their bond to the DPOR at [email protected]. There is no need to mail in the original bond form. Immediately after you purchase your bond, Jet will provide you with a digital copy you can use for filing.
How Do Virginia Contractors Renew Their Bonds?
Bonds are issued for two years coinciding with the contractor’s license term. Jet will send you a renewal quote four months prior to the expiration date. Upon renewal, Jet will also provide you with a Continuation Certificate that needs to be emailed to the DPOR. All Virginia Contractor License Bonds must start and expire on the last day of the month.
How to Become a Licensed Contractor in Virginia
Contractors seeking to obtain licensure in Virginia must meet multiple requirements, including creating a business entity, designating a qualified individual and demonstrating financial responsibility.
The below steps outline how to obtain a Virginia Contractor License.
1. - Form a Business
All contractors must form a business entity and register it with the State Corporation Commission. All owners/officers of the business must be included in the application as the licensee’s “Responsible Management” and provide their names, social security numbers and address.
2. - Determine the License Class
Contractors must apply for either a Class A, B or C license. As mentioned above, the license class determines the scale of projects the contractor can undertake. There are no limitations on the project value for Class A contractors, Class B contractors can only take on individual projects costing less than $150,000 and the total cost of all projects taken on within a 12 month period cannot exceed $1 million, and Class C contractors can only take on individual projects costing less than $30,000 and the total cost of all projects taken on within a 12 month period cannot exceed $250,000.
3. - Determine the License Classification
Contractors are required to apply for unique license classifications which define the type of work they can perform. Contractors can apply for multiple classifications, but can only perform construction work on projects that fit within the scope of their license’s classification(s).
The license’s qualifying individual must meet specific requirements depending on the type of classification. A full list of all Virginia Contractor License Classifications can be found online here.
4. - Identify the Qualifying Individual
All contractor licenses in Virginia must be “qualified” by an individual that meets the experience and proficiency requirements for the license classification(s) being applied for. As outlined above, each license classification requires qualifying individuals to hold either an individual certification, license or pass an examination.
Qualifying individuals must have at least 5 years of relevant experience for a Class A license, 3 years of relevant experience for a Class B license and 1 year of relevant experience for a Class C license.
All qualifying individuals must be either a company owner/officer and be part of the licensee’s “Responsible Management” or be a full time employee (minimum of 30 hours a week and on a W-2).
5. - Identity the Designated Employee
Contractors are required to pass an examination (separate from the examinations required of qualifying individuals) to obtain their business license. The “designated employee” is the individual who passed the examination, and must be an owner/officer or full time employee (W2). Class C licenses do not require a designated employee.
6. - Complete the Pre-Licensure Education Course
Contractors must complete a pre-licensure education course prior to submitting their license application. The course must be completed by either an owner/officer of the company or its designated employee. A list of approved educational providers can be found here (click “Education and Exams”).
7. - Purchase a Surety Bond or Submit Financial Statements
Contractors must either purchase a $50,000 surety bond, procure CPA audited or reviewed financials or complete a Financial Statement Form and include any supporting documentation.
8. - Complete the Application
Contractors must mail their completed application, including all required fees, to the DPOR at the following address:
Commonwealth of Virginia
Department of Professional and Occupational Regulation
9960 Mayland Drive, Suite 400
Richmond, Virginia 23233-1485
The DPOR typically reviews applications within 30 days of receiving them.
How Do Virginia Contractors Renew Their License?
Contractors in Virginia can renew their license online here. Licenses are valid for two years and expire on the last day of the month in which they are issued.
What Other Bonds Do Virginia Contractors Need?
Contractors in Virginia may be required to obtain additional license/permit bonds for municipalities they perform work in. Additionally, project owners may require contractors to obtain performance and payment bonds guaranteeing the completion of work and payment of all subcontractors and material vendors.
Jet writes all Virginia contractor/construction bonds at the lowest market rates. Contact our office to obtain a quote or submit an online application.