The cost of the contractor`s surety in California can vary greatly due to many factors, including creditworthiness and license history, among others. Contractors with good credit and a clean license history will often see bond payments of around $100 per year for the $15,000 authorized bond, while those with bad credit or other licensing issues may see rates of up to $2,000 per year in certain circumstances. Since each guarantor uses its own rating system, bond premiums can vary considerably from one guarantor to another. Depending on the state where you are applying for a licence, you may be aware of this guarantee as a “general contractor`s licence bond” or “home improvement contractor`s bond”. Housing professionals in Texas need to get a loan from a contractor. The first step is to define the surety(s) and contractor`s guarantees you need and what amounts are required. If you still have questions about contractor retention and insurance, contact our team today! The bond is posted for the benefit of consumers who may be harmed by defective construction or other violations of the Licensing Act, and for the benefit of employees who have not received the wages to which they are entitled. Even with an average credit score, applicants often receive a rate of 2% to 5% of the total amount of bond coverage. A low credit score could increase your premium to 15%. There are several types of construction bonds, but the guarantee known as a contractor`s license bond is the one specifically required in most states to obtain a contractor`s license.
This is a legal contract between three parties: contractor license bonds are required at the state, regional or local level to become a licensed contractor. As a result, costs and requirements vary depending on where construction will take place. Select your state below for more detailed information about contractor bonds in your area. Liability insurance, on the other hand, is generally optional insurance for most California entrepreneurs, unless they are organized as a limited liability company (LLC). Many prudent entrepreneurs opt for liability insurance to provide additional protection in the event of bodily injury or property damage. On the other hand, liability insurance is available within many different coverage limits, with some policies starting at a limit of around $250,000 and extending up to $10 million through deductible policies, with the $1 million limit being a very common amount of coverage for small entrepreneurs. Because liability insurance is generally not required by law for most California entrepreneurs, they are free to choose the limits they have approved by the insurance company and are also willing to pay for it. California contractors are required to maintain an active license bond of $15,000 (or cash equivalent) filed with the CSLB as a condition of license. The amount of the bond is set by law, which means that a contractor cannot require a higher or lower bond amount, although currently an eligible person`s bond is valid for the lower amount of $12,500. Therefore, there are no coverage options of choice for the licensed obligations of contractors in California that contractors can choose from. Whatever your loan, SuretyBonds.com works with many of the largest suppliers in the industry, which means we`ll be looking around until we`ve secured your lowest available interest rate on your contractor bond.
Apply today to find out how much you`ll save with SuretyBonds.com! In general, a construction bond of this type works like this: construction professionals who are willing to stick together to get a general contractor license can reach our warranty specialists in the following way: Applicants with excellent credit can pay a premium of only 1% of the total amount of the bond. So if the amount of the bond is $10,000, the premium is only $100 for the term of the bond. The bond costs between $69 and $600, depending on the contractor`s personal credit, licence history and classification. In addition, you may need to meet other warranty requirements, depending on the type of work you want to perform. For example, two separate warranties may be required to perform electrical subcontracting and general contractor work. As mentioned earlier, each guarantor will use their own proprietary rating system to determine how much a particular bond will cost each contractor, but almost all will assess a contractor`s credit and licensing history, with a few rare exceptions. Many will also charge for certain higher risk classifications, such as C-39 roofers or C-53 pool contractors. Contractors are required to purchase royalty obligations through state and local laws to protect a government agency by transferring to a surety company the cost of ensuring that the public is compensated for damages resulting from a violation of a contractor`s licensing law.
The Guarantee Company provides the Government with a guarantee (the Guarantee) that customers, vendors, suppliers and employees of a licensed contractor will receive payment of financial damages resulting from a violation of the laws and regulations relating to the contractor`s licence up to a limit set out in the bond (“Penalty Amount” or “Surety Amount”). The bond company also directly accepts claims from the public and determines the validity of the claims. .