Plumbing Surety Bond
What is a Plumbing Bond?
A plumbing bond is a form of license bond, meaning a bond a professional must obtain before earning a license. A plumber's bond essentially holds a plumber financially responsible if they fail to follow state laws and codes of conduct. When that happens, the party that hired the plumber can file a claim against the bond seeking financial compensation. As long as the claim is valid, it's guaranteed to be paid, and the plumber will be held financially responsible for that amount. Since bonds make it less likely for a plumber to escape accountability for misdeeds, they help to regulate the industry and build trust in local plumbers.
How does a Plumbing Surety Bond work?
If someone feels their plumber has violated state laws or the terms of a contract, they have the legal right to file a claim against the plumbing bond seeking financial compensation equal to the cost of damages. The surety company backing the bond will settle any valid claims even if the plumbing contractor doesn't pay, after which point the contractor must pay the surety company back the full amount of the debt. Surety bonds are not an insurance policy that settles debts; they're a line of credit the bonded party must pay back.
Who should get a Plumbing Surety Bond?
Some but not all states require bonds, either as part of the licensure process or as an independent requirement. States require bonds because bonds are an effective tool when it comes to ensuring that licensed individuals and businesses operate within applicable laws and rules. There are serious financial and legal consequences for operating without a professional license, so anyone required to get a bond should seek one out immediately.
Who are the parties involved in a Plumbing Surety Bond?
Including the plumber, there are three parties total:
- Principal - The plumber required to obtain the bond and required to pay for claims filed against the bond.
- Obligee - The person or company hurt by the plumber's misconduct. The obligee has the right to file claims for damages against the bond.
- Surety - The company that issues the plumbing bond to the principal. The surety also guarantees payment to the obligee.
How much does a Plumbing Surety Bond cost?
Different states require different bond amounts. For instance, Illinois requires a $20,000 bond compared to Iowa, which requires a $5,000 bond. The amount refers to the total amount the surety will pay out in claims. The cost of one of those bonds is a small percentage of the overall amount - so in Iowa it could cost just a few hundred dollars. Underwriters at the surety calculate costs based on the applicant's credit score and history.
Can you get a Plumbing Surety Bond with bad credit?
That depends on the surety company. In all cases, plumbers with bad credit will pay more for a bond, but they won't necessarily be denied or even charged an exorbitant rate. Give yourself the best chance of getting approved for an affordable bond by working with a nationwide surety brokerage like Viking Bond Service.
How long does a Plumbing Surety Bond remain valid?
Details vary by state, but most bonds are valid for either one or two years. To renew, you will need to agree to have your credit reassessed. Based on that assessment, the bond cost could go up or down compared to last time.
How are claims handled for Plumbing Bonds?
Before rendering payment, the surety will use whatever resources necessary to investigate the truth of any claims. If a plumber was in fact in the wrong, the surety settles the claim with the obligee up to the amount of the bond. However, the claim is not fully settled until the principal (the plumber) pays back the surety with interest and related fees added to the amount.
How to apply for a Plumbing Surety Bond?
You will need to complete a standard bond application with information about your background, your finances, and your plumbing business. Underwriters may also ask for additional financial information. If you need a quote fast, get one within 24 hours through Viking Bond Service.
Viking Bond Service - A Partner to Plumbers
If your plumbing business needs a bond, count on us to make obtaining one quick and easy. Fill out our online application day or night. Or get information and answers first. Contact our team through the form on this page or by calling us at 888-278-7389.
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