Get An Instant Quote on California Contractor License Bond ($15,000) Now
California Contractor License Bond ($15,000)
As a prerequisite for receiving a license in the state of California, the Contractors State License Board (CSLB) mandates that all licensed contractors and licensing applicants procure a California Contractor License Bond in the amount of $15,000.
Customers of a contractor are protected by the bond in the event that they suffer financial losses as a direct consequence of the conduct of the contractor, as required by section 7071.6 of the Business and Professions code in the state of California.
Some surety companies put in a lot of effort to make the process of becoming bonded as easy as possible by offering immediate online quotations for contractor license bonds. This eliminates the need to fill out thousands of paper forms. The process of getting a quotation is both quick and free, and there is no need to actually make a purchase.
How It Works
It is required that the California Contractor License Bond come from an insurance company that is recognized by the California Department of Insurance. The name of the insurance firm that is responsible for providing a surety bond may also be referred to as the bond company or the surety company.
The surety company gives the Contractor State License Board (CSLB) a guarantee (the surety bond) that the customers, vendors, suppliers, and employees of a licensed contractor will receive payment for financial damages due to a violation of the California Contractor License Law, up to a limit of $25,000 (“penal sum” or “bond amount”). This payment is capped at the amount of the surety bond.
The bond business is also directly responsible for receiving claims from the general public and determining whether or not the claims are legitimate. In the end, it is the responsibility of the contractor to account for their conduct, and the California Contractor License Law mandates that they do so by reimbursing the surety business for any payments made under the bond or else they risk having their license suspended indefinitely.
Infractions that result in a payment on a bond may include a contractor failing to pay workers or suppliers, leaving an unfinished task, or failing to correct poor workmanship. Other possible violations include the contractor failing to complete the job.
Additional Surety Bonds Needed for Contractors in the State of California
Although all licensed California contractors are required to carry a $15,000 Contractor License Bond, some contractor licenses may demand additional bonds based on their licensing status. These additional bonds include a Bond of Qualifying Individual in the amount of $12,500, a $100,000 LLC Employee/Worker Bond, or a Disciplinary Bond.
Contractors may also be required by the owner of a project to submit a bid, performance, and payment bond, which is often referred to as a contract surety bond, on a job-by-job basis. This need might come from the owner of the project.
The price of a contractor license bond is mostly determined by the applicant’s credit score at the time of application. Well-qualified applicants should expect to pay typical annualized rates that start at less than $100 for the bond. While each surety will use its own mix of proprietary rating variables to determine rates, the applicant’s credit score is by far the most important consideration. There are also more rating elements to consider.
As part of the underwriting process, surety carriers will check the contractor’s credit record. This is due to the fact that the contractor is ultimately responsible for reimbursing the surety bond business for any claims that are made on a bond. The examination of your credit is a soft check, which means it won’t have any effect on your credit score.
Because California Contractors Insurance Services collaborates with a number of different surety bond firms that provide California Contractor License Bond, each of which has a distinct appetite for risk, they are able to provide contractors with bad credit the opportunity to buy the bond at the most competitive prices currently on the market.