California Contractor Bond

All contractors working in California must secure a contractor bond before being issued a license to operate within the state. They must then maintain and renew bonds as necessary to keep their licenses active. The surety specialists at SuretyBonds.com provide comprehensive bonding services for professionals looking to secure and then maintain a California contractor bond.

Surety Bond Basics

Contractor bonds work similarly to other surety bonds in California. Each bond acts as a contract between three entities: a principal, an obligee, and a surety provider. When it comes to California contractor bonds, the Contractors State License Board acts as the obligee with the intention of protecting consumers within the state. The bond's principal is the individual contractor who purchases the bond, and the surety provider is the company or agency who issues the bond.

Contractor bonds protect consumers who could potentially be harmed as a result of defective construction or other license law violations. These bonds also help ensure payment for employees who are waiting to be paid for their work on a construction project.

If a contractor violates license laws set forth for the profession, harmed parties can make a claim against the bond to gain compensation. If the claim is found to be valid, then the contractor will need to pay the harmed party. If, for some reason, the contractor is unable to resolve the situation, the surety will be held accountable for providing some sort of reparation that can cost up to the bond's face value. Since sureties take this risk with each bond issued, they thoroughly analyze each contractor before deciding to supply the bond.

California Contractor Bond Regulations

The Contractors State License Board (CLSB) sets surety bond regulations for contractors in California. It is up to each individual contractor to make sure he or she is in compliance with all bonding regulations at all times. Contractor bonds should be in the amount of $12,500. It's crucial for the business name and license number on the surety bond to be identical to records maintained by the CLSB.

Applicants can get necessary bond forms from the Contractors State License Board, bonding companies, or other surety providers. All bonds need to be written on a form that has been approved by the Attorney General's Office. The CLSB Headquarters Office must have the bond in its possession within 90 days of the bond's effective date.

Additionally, if a contractor's license has been revoked for violating the Contractor's License Law, the entity must secure a disciplinary bond before being reinstated and regaining the license.

California Contractor Bond Costs

Surety providers charge principals a bond issuance fee because they take a risk when financially backing the principal's work. Bond costs vary based on a number of different factors. Before issuing a bond, surety providers may consider the principal's credit score, financial history, and work record to verify his or her reliability. Applicants with a good credit score and strong financial history can find reasonably-priced bond premiums. SuretyBonds.com offers competitive rates as low as $125 per bond.

An applicant's credit score heavily influences the bond premium. Applicants who have low credit scores should expect to pay slightly higher fees when purchasing a bond, as the surety provider takes a greater risk in backing the work of a professional who could be financially unstable. Some surety companies refuse to work with contractors who have poor credit, but SuretyBonds.com works to assist virtually all contractors with their bonding needs.

Get a California Contractor Bond

Applying for a bond is similar to applying for an insurance policy, although they are two entirely different forms of protection and should not be confused. The CLSB requires all bonds to be issued by surety companies that have been licensed through the California Department of Insurance. Applicants must locate surety providers on their own, as the CLSB cannot recommend bonding companies.

Contractors in California can apply for a contractor bond online with SuretyBonds.com in a matter of minutes. After our surety specialists review your credit score and financial standing, you can usually receive a quote within just a couple of days. From there you will work with a surety specialist to guarantee you get the right bond for your needs at the most reasonable cost.