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Washington Contractors License Bond

Contractor license bonds are among the most important types of surety bonds in Washington. As one of the required items for individuals seeking a contractor license in Washington, the contractor bond helps ensure that licensed contractors in the state can be trusted to do good work. With contractors operating in so many different trades such as electrical, plumbing, construction and many others, the contractor license bond has a wide range of impact on the contracting industry.

Contractor license bonds serve multiple purposes. These bonds are primarily required as a consumer protection. The bond gives consumers an additional path of recourse in situations where work performed by a contractor was not completed in an acceptable manner. While the mechanics of the bond are geared toward consumer protection the bond also has the effect of building consumer confidence. A licensed, bonded contractor instills trust in consumers.

What is a Washington Contractors License Bond

A contractor license surety bond provides a form of guarantee that the bonded contractor will perform the job in a manner acceptable to applicable trade and workmanship standards. The surety bond gives the contractor additional incentive to perform quality work and stand by his/her work. The bond also promotes problem resolution in instances where issues may arise with work completed by the contractor.

How does a Washington Contractors License Surety Bond work?

Through this agreement, the surety provides a financial backing of the contractors performance on jobs he/she is hired to complete. The surety bond provides a path of recourse to consumers in instances where the contractors work was not completed in an acceptable manner. When this happens, the affected consumer may claim on the bond up to the bond amount. If a claim is found to be valid by the surety, a payment is made to settle the claim. Unlike an insurance policy, the contractor is responsible to the surety for any amount paid out on claims. For this among other reasons, it's best for contractors to avoid bond claims and settle any workmanship issues before they escalate.

The Washington contractor license bond builds confidence with the public and individual customers. It gives them the security of knowing that they've got financial recourse if work is not completed or completed incorrectly. Customers prefer to work with bonded contractors. Why would you want to risk losing money?

Who should get a Washington Contractors License Bond?

Anyone seeking a Washington contractors license will need to obtain a surety bond first. The state considers bonds to be an essential part of the licensure process, and if a contractor cannot provide proof of a bond, the state will not grant the contractor a license. There are significant penalties for operating without that license. Since everything else depends on having a Washington contractors license bond, don't delay getting one. Find a trustworthy surety agency to work with ASAP, and submit an application immediately. A good suety agency will return a quote within 24 hours so that contractors can check the box for surety bonds and move the licensing process forward.

Who are the parties involved in a Washington Contractors License Bond?

The contractor is just one of three parties with a stake in the bond agreement:

• Principal - The bonded party and the person liable for all claims against the bond. The contractor is considered the principal and has the final financial responsibility in the bond agreement.
• Obligee - The bond beneficiary and usually the person hiring the contractor.
• Surety - The bond company that issues the bond to the principal. The surety pays for claims filed by the obligee if the principal cannot pay, but the principal must pay the debt back.

How much does a Washington Contractors License Bond cost?

Several details are considered when determining the amount to quote for the Washington contractor license bond. The surety bond amount, which is the amount that can be claimed on the bond, is always a key consideration. In Washington, the contractor license bond amounts are $6,000 for specialty contractors and $12,000 for general contractors. Credit is also a determining factor. While good credit can lead to lower quotes, quotes for applicants with credit challenges are provided as well. As credit improves year over year, the bonds can be re-underwritten for lower premiums.

Contractor license bonds in Washington are typically quoted in the 2% to 4% range, as a percentage of the bond amount. However, some quotes come in outside of this normal range on the low and high side. Since surety bond quotes are based on each individual application, quotes provided for two separate applications can vary quite a bit. It's worth mentioning that prior surety bond claims can result in significantly higher quotes. It's always a good idea to avoid bond claims - especially because they represent the largest cost related to a contractor license bond in Washington State. Without claims, the costs are quite manageable.

How are claims handled for Washington Contractors License Bond?

The surety plays an important role if and when someone files a claim against the bond. Since the surety guarantees payment for all valid claims up to the total amount of the bond, the surety needs to determine whether claims have merit before settling them. That typically involves an investigation. If the facts of the claim check out, the surety pays the obligee for the damages they suffered at the hands of the negligent contractor. Lastly, the principal (the contractor who is bonded) pays the surety back the full amount of the damages, often with interest and fees added.

How to apply for a Washington Contractors License Bond?

Contractors can purchase Washington contractor license bonds from a surety company licensed in the state. The contractor must pay annual premiums to keep the bond current for as long as the contractor license is active. The process of obtaining the bond is simple, in most cases it only involves a general commercial bond application, a credit check and payment of premium. The process can be completed in as little as a day.

How to renew a Washington Contractors License Bond

Contractors need a Washington contractors license bond to obtain a license for the first time. They also need to prove they have an active bond every time they renew their license. Surety bonds, in most cases, only remain active for 12 month. They need annual renewal just like many professional licenses. Failure to renew a bond makes it impossible to renew a license. Worse, letting surety bond protections lapse makes a Washington contractors license invalid, meaning any work performed would be illegal and subject to strict penalties, including the inability to ever obtain a contractors license again. To make the stakes crystal clear, letting surety bond coverage run out could put an entire career or a whole business in jeopardy. Avoid that risk by staying on top of the renewal process.

The surety agency will send out renewal notices well in advance of the expiration date. To renew, a contractor must complete another bond application and submit to a new credit check - it's very similar to the initial surety bond applications process. If the applicant's credit score has gone up in the preceding year, they're considered less risky than before, so their surety bond cost may go down. But if their score has gone down, they're considered more risky and premiums may be higher as a result.

Smart contractors make bonding a part of their business planning year after year. Stay on top of renewal dates (even though the surety agency will help) and budget for surety bond costs. Over the long-term, improve your credit score to lower what you pay for premiums.

Washington Contractor License Bonds by Viking Bond Service

The most important part of getting your contractor license and bond in Washington State is selecting a reliable, experienced bonding company. You can trust Viking Bond Service with your Washington contractor license bond request. We've provided our Washington clients with contractor bonds among many other bond types for over a decade. With Viking Bond Service, you are guaranteed a stress-free, easy, and fast process. Contact us today or start an online application now. For more information on Washington contractor license bonds or other surety bonds speak with one of our service-oriented team of bond experts by filling out the contact form on this page or by calling 1-888-278-7389.