27 Aug Understanding California Contractors Bonds
Understanding California Contractors Bonds
In California, Contactors are required to carry a $12,500 bond to maintain their license with the Contractors State License Board. These bonds, while similar, can vary substantially in price. We will explain what you can do to get the best price on your Contractors Bond.
Understanding California Contractors Bonds – Bond Requirements
As mentioned above, in California you are required to carry a $12,500 bond to maintain a Contractors License. There are additional Bond requirements, depending on your business operations. In California, Contractors with a LLC business entity are also required to carry a $100,000 bond. This increase bond amount can be expensive, so keep that in mind if you are just starting out. In addition, there are alternative bonds that are available specifically for certain classes such as Roofing Contractors or Janitorial Companies.
Understanding California Contractors Bonds – Credit History
Every Bond Company rates bonds differently, however, the largest rating factor for Bond premium is the Contractors personal credit history. This is important to remember because the difference in premium between a Contractor with poor credit and excellent credit can be substantial. For example, Contractors purchasing a $12,500 bond with excellent credit can in some cases purchase a bond for under $100 annually. Alternatively, Contractors with poor credit can pay over $2,000 annually for the same bond.
Understanding California Contractors Bonds – How to Save
There are several options available to those having a difficult time getting a good rate on their Contractors Bond. For those with poor credit, you can often get a much better premium rate by getting a qualified co-signer on your policy. For those that qualify, you can purchase a 2, 3, or 4-year bond. Purchasing a multi-year bond will bring down the premium of the bond by offering a multi-year discount. Lastly, depending on the bond carrier, you may be able to get a multi-policy discount by carrying other lines of Insurance with the same carrier as your Contractors Bond.
If you would like to learn more about Contractors Bonds for your business, give us a call at 925-297-4829.
All information is general in nature and is intended to provide guidance only. It is up to you to request specific coverage options, the agency and agent do not bear this responsibility. Always read the policy if there is a questions about coverage or a claim. If any information herein should conflict with your actual policy’s specific language, the policy language will be controlling.