A contractor bond, or contractor’s license bond, is a contract in which a surety company promises your contractor will follow state rules and regulations.
What is a surety bond?
If you are looking for someone to remodel your kitchen be sure only to hire licensed contractors who are legally able to operate in your state. The contractor’s state license board are there to help ensure contractors have the proper training and bond in place to abide by state laws. Purchasing a license bond for contractors in California is fairly simple. The bonds pricing is based upon the contractors credit history and can often times be purchased and issued same day.
Why you should only hire a bonded contractor
Working with bonded contractors helps to ensure that your work is properly protected in the event something were to happen on the construction projects or there were to be any defects with the contractor’s work.
It should be noted that being bonded is not the same as being insured. The bond only guarantees you the proper fulfilling of a job contract. The contractor should also carry liability insurance so that you, the customer, are not held responsible for any on-site injuries that may occur on your property.
Contact the bonding company directly if you have any questions about the agreement: they’ll be glad to help. Make sure the contractor is bonded, licensed, and insured, and you will be on the side of the angels.
If you are a contractor, why should you choose to be bonded?
Being bonded gives you instant credibility with the public. Customers are looking for every measure of protection possible when dealing with large money transactions, and if you choose not to be bonded, it will reflect poorly on your abilities as well as your business. It assures your customers that you:
— have undergone a rigorous prequalification process
— are much more likely to complete the project as agreed upon
–will have a backup should severe problems occur.
Having read the importance of the contractor’s bond above, how much does a Contractor Bond Cost? Well, the Sector of Industrial Relations’ Division of Labor Standards Enforcement wants farm labor contractors to post $25,000 surety bonds. Some contractors need to post $12,500 to qualify for private bonds before carrying out business within the country.
All of these contract bonds are in respect of underwriting consideration, hence the price you’ll pay for your contractor bond directly reflects on the status/review of your private credit report. Being covered by a surety bond is a win-win proposition for both customers and contractors.