Contractor License Bonds are a type of surety bond specifically designed for contractors. Most states require contractors to carry a contractor license bond to keep their license active. Contractor license bonds were created to ensure that contractors operate in compliance with the local laws and statutes of the state in which they work. The main purpose of a Contractor License Bond is to benefit consumers compensation as a result of a contractor’s work, or employees who are owed unpaid wages.
Contractor License Bonds are typically issued by insurance companies, however bonds are not insurance. A contractor license bond is a contract between the surety, the contractor (principal), and the client (obligee). And unlike insurance, surety bonds are fully indemnified, meaning if a claim is paid out to the obligee by a surety on behalf of a contractor, the contractor is responsible for repaying the surety the amount of the claim.
Contractor License Bonds are underwritten like most other commercial surety bonds. License bond premiums are based primarily on credit score and existing claims on a contractor’s license. However, there are exceptions like newly licensed contractors that have not been associated with another license in the past. In some cases, like bankruptcy, a surety company may ask for personal and company financial statements.
ContractorsBond.com works with variety of surety companies to offer you several options for your Contractor License Bond. Our extensive network of surety company partners enables us to shop your license bond and find the best market for your unique situation.
For more information regarding Contractor License Bonds, please call us at 866.376.2510 today.