Does your state require that you carry a surety bond, often called a contractor's license bond? Are you aware of the many different requirements for every state? As a company it's essential that you understand how to obtain your contractor bond and why you are required to transport it. premium bonds invest UK
First and foremost what is a contractor's license bond?
A contractor's bond is purchased by a company as a guarantee to their clients of the compliance with state laws. This allows the client with financial assurance. The particulars of the size, what can cause a payout and what other kinds might be required differ from state to state.
Contractor's License Bonds might be similar from state to mention; however, there are very important differences and requirements that should be understood. Like:
Arizona -
- License bonds are needed by the Arizona Registrar of Contractors
- An attachment is needed to cover damages as a result of noncompliance with license standards
- Bonds vary by size from $2,500 to $90,000 based upon their license type and just how much level of work a company performs
- Contractors which have conducted business in Arizona at under per year may also be required to obtain a Sales Tax Bond.
California -
- License bonds are needed by the California Contractors State License Board (CSLB)
- An attachment is needed to cover damages brought on by violations of the Contractors License Law
- All contractors license bonds are for $12,500
- Responsible Managing Employees and Responsible Managing Officers that own significantly less than 10% of the business are needed to obtain a different $12,500 bond
- The CSLB may need a separate Disciplinary Bond for contractors who have been disciplined; the amounts of these vary.
New Mexico -
- License bonds are needed by the New Mexico Regulation & Licensing Department
- An attachment is needed to buy cost to repair building code violations
- All contractors license bonds are for $10,000
Nevada -
- License bonds are needed by the Nevada State Contractors Board (NSCB).
- An attachment is needed to cover willful and deliberate violations of a building contract as well as employees damaged by a contractor's failure to pay wages
- Vary by size from $1,000 to $50,000 and are set by the NSCB. Their decision is based on such factors as form of business, experience and monetary limit granted.
- Residential pool and spa contractors should also obtain a client protection bond. The quantity, also set by the NSCB, varies from $10,000 to $400,000
Oregon -
- License bonds are needed by the Oregon Construction Contractors Board (CCB) and the Oregon Landscape Contractors Board
- An attachment is needed in the case the contractor is ordered by the CCB to pay damages as the result of a CCB final order
- Vary by size from $3,000 to $75,000 based upon their license endorsement classification as well as just how much level of work a company performs. Contractors that work on public works projects larger than $100,000 must obtain a $30,000 Public Works Bond.
Washington -
- License bonds are needed by the Washington State Department of Labor & Industries
- Required to pay unpaid wages, unpaid material suppliers, unpaid taxes to the State of Washington and to cover damages as a result of breach of contract
- Vary by size from $4,000 to $12,000 depending on the form of contractor
If your state requires a license bond, you can find other bonds that may be required by the project you are bidding on.
Other forms of contractor's bonds:
Bid Bonds - Submitted by the contractor with his bid for a certain project. Usually 5-20% of the full total bid. A bid bond protects projects from contractors which have bid too low and discover they cannot meet their bid obligations.
Performance Bonds - This kind guarantees contract performance by the contractor. The surety company's capital and surplus back this guarantee up to the financial limit of the bond.
Payment Bonds - Guarantees that the contractor will probably pay certain bills for labor and materials. The surety company backs this guarantee up to the financial limit of the bond.
