Contractor License Bond

People who hire construction trades often want licensed and bonded workers because contractor license bonds guarantee against unfinished work, failure to meet contract terms, or that the work is in compliance with the laws and regulations of their profession.

When a contractor is licensed and meets bond requirements, it means that they meet some legal and financial standards to help protect their clients.

Generally, a licensed contractor has passed an accreditation exam, met a number of required hours and is legally permitted to do their job.

A bonded contractor has the financial backing to protect their clients if they don’t do the work properly. They have bought a contractors license bond, a type of surety bond, to help cover losses from things like unfinished work projects, property damage or a failure to meet contractual obligations.

A contractors license bond can be useful because this aspect of the work is often not covered by insurance.

Contractor license bonds typically expire one year from their effective date unless otherwise required.

Commercial contractor license bonds can be issued online fast. There are two ways to price and buy your bond:

1. For a fast quote:

• Under Quick Quote choose your state or US territory.
• Select the Bond Category menu.
• If there’s an option for a contractors license, you can get a quote right away.

  • Select the city name and bond type you require.

  • Hit Next, then enter your trade.

  • The Get Quote button will show you the estimated cost of your bond in seconds.

2. To buy your bond right away: Under New Bond, select your state or US territory. If we offer contractor license bonds in your area, the city name and bond name will appear.

• Click the Get Bond button.

• Enter your name and email, the effective date of the bond, and your contractor’s trade. You’ll see the price quote immediately.

• Select the principal type that most closely resembles your business, such as a sole proprietorship or an LLP.

• Share who will sign the bond and where.

• Process payment and your bond is issued on the spot.

Bonds are not insurance, but it’s easy to confuse the two.

Insurance is a two-party agreement, meaning that the insurance company agrees to pay for losses as described in the policy contract. That could include accidents, injuries or other unfortunate events. Think of the insurance/policyholder relationship as two sides of a circle.

Contractor license bonds, also called construction bonds or contract bonds, are a three-sided agreement, and this relationship looks more like a triangle.

One party is the surety, and that can often be the role of an insurance company. They guarantee the work or obligations of a second party, called the principal (usually a construction contractor) to a third party — say, a city or property owner — known as the obligee.

Contract license bonds are a way to help ensure that contractors fulfill their license requirements. And if they don’t, the bonds cover failings or shortcomings in meeting those license law obligations.

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