What is a License Bond?
License bonds are required by certain governmental entities to allow various types of contractors (ie. Electricians, Plumbers, Roofers, etc.) to work their chosen trade legally in that jurisdiction. In most cases when a State requires a license, they also generally require the contractor to pass some type of certification to show that the contractor is competent in the basics of their trade along with any bond and insurance requirements they might require to issue a contractor a license.
What is the Cost of a License Bond?
The cost of State required license bonds varies by the amount of the bond required. The typical cost of a license bond is anywhere from $100 – $400. The cost of this bond varies from State to State.
Another major component of the cost of the bond is the credit of the person applying for the bond. The price difference for contractors with good credit versus those with bad credit is staggering. An example is the State of Washington General Contractors bond. A contractor with good credit can obtain this bond for around $300 for the year. On the other hand, a contractor with bad credit will have to pay at least $1,500 a year for the same bond. In certain States, some companies do not require a credit check to issue license bonds, so it is always best to check with the professionals at UnitedSuretyBonds.com for a free quote. Good credit as defined by most bonding companies is a credit score above 700, no bankruptcy in last 7 years and no unresolved claims against previously issued bonds.
In many places even if the State does not require a license and even in some States that require Contractors to have a license bond, a local City or Town may require a contractor to obtain a license. This allows the contractor to be able to work in that City or Town. The requirements for these bonds vary between $5,000 and $25,000, with $10,000 bonds being the most common. The cost of these bonds are usually $100, but can can be slightly more for larger amounts. Additionally, most municipalities have their own bond form that they require. A frequently asked question we get at UnitedSureyBonds.com is, “Do I need to get a new bond for each municipality or can I use the same bond?” The answer is that you need a new bond for each municipality that requires a bond.
How Long Will It Take to get a License Bond
Another major concern that contractors have about getting a license bond is how long will it take to get processed. In all situations where the contractors credit is “good” as defined above or no credit check is required, the bonds can be issued immediately. These license bonds are in most cases electronically sealed and can be emailed directly to the contractor for their signature. In some cases, an actual signature and seal is required from the Bond company and in that case the bond can be delivered the next day by Fedex or regular mail if time allows.
UnitedSuretyBonds.com can take a check or credit card over the phone to collect payment for the license bond.
If you have any other questions that were not answered here or any bonding questions in general, please call Thomas Hester of UnitedSuretyBonds.Com at 312-878-2372 or email at [email protected].
Remember all we do at UnitedSuretyBonds.com is bonding.