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Arizona Contractor License Bond

Contractor License Bonds in Arizona - State Capitol Building in Phoenix, AZ

Current and future contractors in Arizona need a license to operate their business legally. They also need an Arizona contractor license bond. This guide explains how this license bond works and what it means for your license and business.

What is an Arizona Contractors License Bond?

A contractor license bond is an essential part of the licensing process for contractors seeking licensure in Arizona. The contractor license bond is an agreement between the surety, the contractor and the Arizona Registrar of Contractors. The bond requirement is in place as a consumer protection. Contractor license bonds also serve the purpose of boosting consumer confidence in hiring contractors. The reason is because someone who hires a contractor that doesn't deliver on expectations can file a claim against the Arizona contractor license bond seeking damages. They're guaranteed to receive a settlement as long as what they claim is true, which illustrates why bonds would make someone feel more confident about hiring a contractor.

Why Do I Need an Arizona Contractor License Bond?

The contractor license bond is a kind of guarantee for the state that a contractor will conduct business in a manner congruent with applicable state laws and regulations. It tells the state that you as a contractor will always uphold high ethical and professional practices. The public also benefits from contractor license bonds. Being bonded sends the message that the contractor will complete the work in an acceptable manner and will seek to remedy any issues with the work performed if any should arise.

For all these reasons, a contractor in Arizona must obtain a contractor license bond before he or she can obtain the license necessary to work in the state legally. Working without a license comes with huge risks ranging from substantial fines and fees to permanent loss of license. Therefore, it's essential to have an active license at all times, meaning it's also essential to have an active surety bond at all times. You need one of these bonds because it's legally required of your business for as long as you're in operation.

What Do Contractor License Bonds Protect Against?

A contractor license bond is a form of guarantee that the licensed contractor will conduct business and complete work in a manner acceptable to state laws and regulations. If a contractor doesn't deliver, either by performing a job with poor workmanship or not completing a job, the potential for a claim to be made on the bond arises. This type of surety bond protects against bad workmanship by holding the bonded contractor financially liable for it. It also protects against someone losing money because of a contactor and not having a way to recoup their losses. Since surety bonds have proven to be an effective deterrent against negative behaviors and a viable way to regulate the important Arizona construction industry, they're included in the Arizona general contractors license requirements, among others.

How Much Does an Arizona Contractors License Bond Cost?

Contractor license bond amounts vary in Arizona. The required bond amount is based on the license type: Residential, Commercial General or Specialty, and the expected gross business volume. Bond amounts range from $2,500 for a Commercial Specialty Contractor with a gross volume of $150,00 or less, to $100,000 for Commercial General Contractors with a gross volume exceeding $10 million.

Surety companies determine how much Arizona contractor license bonds cost using individual applicant determinations. The total cost depends mostly on the contractor's credit, and their record as a contractor to some extent, especially if the contractor has past bond claims. Contractors with good credit will typically receive lower bond quotes than a contractor with challenged credit. The typical price range for an Arizona contractor license bond is from 1.75% to 5% of the bond amount.

If you have a credit score below 700, have a blemish like a bankruptcy or past bond claim on your record, or if you've been turned down for a bond elsewhere, Viking Bond Service is here to help. We run a special program designed to help more people secure the bonds they need.

How to Get a Contractor License Bond in Arizona

Contractors must purchase Arizona contractor license bonds and show proof of the bond to the Arizona Registrar of Contractors (ROC) to be licensed. These bonds are common and can be purchased from a surety bonding company licensed through the Arizona Department of Insurance. The contractor must pay premiums to keep the bond current for as long as the contractor license remains active.

It's good practice to avoid bond claims. Claims on the contractor license bond could lead to the surety cancelling the bond. When this happens, the contractor will have to find a bond with a different surety, often with higher costs due to the prior claims history. Since the contractor license bond is a requirement to maintain licensure, it's best to resolve any issues with the performed work before it results in a claim on the bond.

In the event that a contractor loses his bond, his license becomes invalid. Any work performed without a valid license is illegal and exposes the contractor to the risk of fines and worse. For all intents and purposes, a contractor needs to keep his Arizona contractor license surety bond in good standing from the first day of business to the last.

How To Renew An Existing Arizona Contractor License Bond

The renewal process happens annually. The bond holder will fill out a new bond application and submit to another credit check. Underwriters will evaluate whether the contractors credit risk has gone up or down in the past year, then adjust the premium price accordingly. The bond renews after the contractor pays the premium. Contractors need to provide proof of an active bond in good standing each time their license is up for renewal.

Why you should get your Arizona Contractor License Bond from Viking Bond Service

Why have contractors across Arizona chosen us as their long-term bond partner? For a few reasons: We make it fast and easy to get a bond; we keep premiums affordable and accessible; and we go above and beyond on behalf of those we serve. Most of all, we make bonding stress-free so that you can focus on your business above all. Give us a chance to earn your loyalty.

Get a Free Quote for an Arizona Contractor License Bond Today!

At Viking Bond Service we have earned our reputation as a top Arizona contractor license bond provider. Businesses and individuals in Arizona trust us to help them secure contractor license bonds, just like people across the nation have for over a decade. Our experienced team of licensed surety bond agents will get you through the simple Arizona contractor license bonding process, so you get the bond you need with no issues or headache. Call us today or use our online application to get started.

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