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California Contractors License Bond

Contractors License Bond inCA - State Capital Building  in Sacramento, CA

One of the most common types of surety bond is the contractor license bond. This type of bond is an agreement between the surety, the contractor, the public, and the state where the contractor is seeking licensure. A California contractor license bond protects the public while also helping to build public trust of contractors by providing a form of deterrent of unethical behaviors and actions by the contractor.

The contractor license bond is like a certification, a guarantee to the state that you as a contractor will always work to high professional and ethical standards. Contractor license bonds also protect the public. They show people that you and the business that hired you and your company are reliable, will not do them harm and will provide professional services. If anyone is harmed by an unethical action or decision during a project, they know they can file for financial recompense against the bond.

Anyone who needs a contractor license in California also needs this specific type of surety bond. Without a bond, it's impossible to obtain a license. And should the bond ever lapse or expire, the license does too, making it illegal to conduct business any longer. Given the close link between surety bonds, the contractor's license, and your business strength, it's important to understand exactly how the bonding process works. That's where Viking Bond Service comes in. Our team is here to provide you with expert information in an accessible way. We're also here to help you get a California contractor license bond quickly and affordably. Keep reading for all you need to know.

What Is a Contractor License Bond and What Does It Cover?

A contractor license bond is a financial promise to adhere to state laws and regulations when working to complete a job for customers. If a contractor fails to do that, either by not completing the job or failing to complete the work in accordance with applicable regulations, a claim can be made on the bond. Valid bond claims are paid by the surety backing the bond. The surety will then seek to recover the amounts paid settling the claim from the contractor.

A contractor license bond also covers other unethical actions. Non-payment of subcontractors, damage or theft of materials by a contractor and damage to property caused by a contractor can result in claims on the contractor license bond.

While the contractor license bond is in place primarily to protect the public, the bond is a valuable tool for contractors because it builds confidence with customers. It assures customers that, even if there is a problem with the project, the contractor will most likely work to rectify the issues. Customers would rather hire a bonded contractor rather than an unlicensed freelance contractor.

Another way surety bonds help both contractors and the people who hire them is by keeping unscrupulous parties out of the California construction industry. The ability to obtain a bond demonstrates a basic level of business acumen, financial stability, and commitment to rules and processes. If someone can't obtain a bond, they probably shouldn't be doing work on people's homes or businesses either. By keeping these bad contractors out of the industry (if you can't get a bond you can't get a license), California contractor license bond requirements make that industry more trustworthy for customers and more competitive for contractors.

How to Get a Contractor License Bond in California

Contractors can purchase California contractor license bonds from a surety bond company licensed through the California Department of Insurance. The bond must be renewed for as long as the contractor remains licensed. Getting the bond is usually as simple as a general surety bond application, a credit check and paying the premium. The whole process can take as little as a day.

The Contractors State License Board (CSLB) of California requires contractors to have in place an active $15,000 surety bond. The bond is a requirement for new licensure, license renewal and reactivation of a license.

A Bond of Qualifying Individual may also be required for some contractors. These bonds, when required, are in addition to the contractor bond. The required bond amount on these bonds is $12,500.

The CSLB also has one additional bond requirement for contractors, the Disciplinary bond. This bond is required to reinstate or reissue a license that was revoked due to a violation of CA Contractors License law. The Disciplinary bond amount is determined by the Registrar. The amount can range from $15,000 to $150,000. The Registrar requires these bonds to be current for at least 2 years.

If you're unclear about which surety bonds you do and don't need and in what amounts, you're hardly alone. At Viking Bond Service, we hear from people all the time who need help making sense of their California contractor license bond requirements. We're happy to provide that help. Rely on our team of bonding experts to determine what bonds you need, and to make acquiring those bonds as straightforward as possible.

The Cost of California Contractor License Bonds

Because California contractor license bonds are underwritten individually, their cost varies from applicant to applicant. The final cost depends mostly on the applicant's credit and to some extent their record as a contractor. The typical price range for these bonds is from 1.5% to 3% of the bond amount. Contractors with stronger credit can expect their bond cost to be lower than an applicant with challenged credit. If your credit makes it difficult to obtain the bond you need to get a California contractor license, don't worry. Viking Bond Service offers a bad credit surety bond program specifically for people who have a credit score on the wrong side of 700 or a bankruptcy serving as a blemish on their record. We can't guarantee everyone will get approved for a surety bond. However, we can guarantee we will do everything possible to get applicants approved and fight hard to keep premiums low. For the best chance of getting bonded, work with us.

How To Renew An Existing California Contractor License Bond

Just as important as obtaining a California contractor bond is keeping that bond active and in good standing. The minute your bond coverage lapses, your contractor's license does too. At that point, any professional services you perform become illegal and subject to strict penalties. You will need to renew the bond every 12 months to keep it active. The renewal process works almost identically to the initial application: You will complete an updated bond application and submit to another credit check. Underwriters at the surety are trying to determine how your credit score has increased or decreased over the previous year so they can adjust your premium price accordingly. Be aware of the renewal deadline. Make sure you're prepared for renewal when the time arrives by setting money aside for the renewal cost. Keep the cost reasonable over the long term by keeping your credit in good standing - so your premiums stay low - and by avoiding claims the surety has to pay - which you must pay back.

How to Manage California Contractor License Bond Costs

Like any other business expense, California contractors need to manage and monitor their surety bond costs carefully. Some proactive steps can help keep this cost low, and even lower the cost every year. Here are some tips to help manage California contractor license bond costs:

  • Pick the Right Surety - Some agencies charge drastically more for the same surety bond. Always choose one that offers fair and competitive pricing - like Viking Bond Service.
  • Avoid Claims - Claims cost significantly more than the bond itself. Having to pay a claim can put a serious hole in a contractor's budget. The best way to avoid this unexpected cost is by knowing what behavior could trigger bond claims, then avoiding that behavior at all costs.
  • Pay All Claims - Contractors have the option to pay for claims before the surety steps in to pay. Settling claims quickly helps a contractor avoid the interest and fees the surety charges. It can also keep a contractor in good standing with the surety, which is important because claims can often lead to loss of bond coverage. Working without a bond makes a contractor's license invalid, creating the risk of other costs, fees, and penalties.
  • Improve Credit - If a contractor's credit has improved since the last time he/she renewed the bond, the new premium price will be lower than before. Steady improvement in credit score and financial standing lead to steady reductions in bond costs.

California Contractor License Bonds by Viking Bond Service

You can trust Viking Bond Service with your California contractor license bond needs. For more than 15 years, we've been helping ensure that our customers stay compliant with California bonding regulations. Our quick, easy contractor license bonding service helps you get the bond you need, with no confusion or headache. Our experienced team of licensed surety bond agents will help you get the California contractor license bond you need at a great price. Get started with an online quote request now.

Request a Contractor License Bond Quote:

If you need a surety bond to get a California contractor's license, don't wait to seek out a bond. Check off this requirement so you're one step closer to getting your license and starting your business. Viking Bond Service is your partner every step of the way. If you have questions or would like more information, you can contact us or call 1-888-278-7389. Our team is eager to get you good information - free of charge and with no obligation to seek a bond. Or you can get a bond quote in as little as 24 hours by completing our online application, available 7 days a week 24 hours a day!

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