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HVAC and Refrigeration Contractor Bonds

If you're a contractor who installs, maintains, or repairs HVAC systems, you know you need a license in order to conduct heating, ventilation, and cooling work legally. But in most states, you must also get an HVAC bond to qualify for the license. This surety bond guarantees you will conduct your business ethically and according to all applicable laws and regulations. Let's see what this means for you and your business.

What is an HVAC Bond?

An HVAC bond, also known as a heating and cooling bond or a refrigeration contractor bond, is a risk management tool that protects your customers from things like code violations or shoddy workmanship. The bond provides this guarantee by simultaneously creating a financial incentive and an enforcement mechanism. The bond requires you to establish a monetary system that penalizes you for unethical or illegal business practices. This bond is a type of license bond because most states require the bond as part of the licensing process.

How Does a Refrigeration Contractor Bond Work?

Like any surety bond type, a refrigeration contractor bond is a legal contract between three essential parties:

  • The Bond Principal – The principal is the bonded person or business whose business actions are governed by the bond.
  • The Bond Obligee – The obligee is the person, business, or government agency that requires the bond.
  • The Bond Surety – The surety is the insurance company that underwrites the bond.

If a customer claims you failed to complete the HVAC job, they can file a claim against the bond. The surety thoroughly investigates all claims. If they determine the claim against you has merit, the surety pays the claim in full, up to the bond's total value. But they dismiss any frivolous claims.

The principal is financially responsible for all valid claims and must reimburse the surety in full, complete with all penalties and fees.

Who Needs an HVAC Bond?

Any contractor who maintains, installs, or repairs HVAC systems in states that require HVAC bonds must have a current HVAC bond to conduct business legally. Currently, the following states require refrigeration contractor bonds:

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • California
  • Delaware
  • District of Columbia
  • Florida
  • Georgia
  • Hawaii
  • Indiana
  • Louisiana
  • Maryland
  • Massachusetts
  • Minnesota
  • Mississippi
  • Nebraska
  • Nevada
  • New Mexico
  • North Dakota
  • Oregon
  • Oklahoma
  • Oregon
  • South Carolina
  • Washington
  • West Virginia

However, even the states that don't require HVAC bonds may have counties and cities that do. So, take care to determine whether your business must be bonded.

How Much Does an HVAC Contractor License Bond Cost?

Like most surety bonds' costs, an HVAC bond's cost is determined by the bond value and the principal's credit score. The obligee, or the state agency requiring the bond, establishes the bond value. These values vary by state, ranging from $1,000 to $20,000. But your cost is just a tiny fraction of the bond value, typically 1%-5%. The better your credit score, the lower the premium you'll pay.

How Can I Get an HVAC Bond?

At Viking Bond Service, we make it quick and easy to obtain surety bonds. Just complete our online bond application, and we'll send you a competitive HVAC bond quote ASAP. If you prefer, contact us online or call us at 1-888-2-SURETY (1-888-278-7389). We're here to help your business with all your surety needs.

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