California Contractor License Bond

What is a CSLB License Bond?

Contractors and construction companies located in California are required by state law to maintain a license bond to keep their construction license active. A license bond is a guarantee for the consumer that the contractor is financially able to complete projects, provide services as promised, and protect employees who have been denied wages. There are two ways that a California contractor can cover this bond: one way is to maintain a $15,000 license bond with the Contractors State License Board, and the second way is to put up cash as a guarantee of services and work. The preference is to have a license bond in place.

What is a Bond of Qualifying Individual?

In some cases, a contractor’s bond is not enough to guarantee coverage for the contracting company. The second type of bond may be required if the person responsible for managing the company owns less than 10% of the voting stock in the corporation. This is called a Bond of Qualifying Individual and is required in addition to the Contractor’s License Bond mentioned above.

To qualify , a surety company must be involved to write the policy. The bond must be an additional $12,500 to the $15,000 already secured through the Contractor’s License Bond. All business names, numbers, and qualifier’s name need to match the board’s records to ensure coverage. There needs to be an attorney involved to authorize the surety, and it must be approved by the Attorney General’s office. All paperwork and supporting documents need to be sent to the headquarters of the board within 90 days of receiving the bond to ensure continued coverage. Once a qualifier bond is needed, don’t delay in getting your paperwork together. We can help.

How Much Does a Contractor License Bond Cost?

While the cost of a California Contractor License Bond is standard for most contractors at $15,000, there are instances when it can be much higher. When dealing with surety and bonds, the amount of money that needs to be put up can often depend on the personal credit of the managing partner or sole proprietor. Because new businesses don’t have any credit history, if the business owner has poor credit, more money may need to be put up as a bond to secure and maintain the contractor license in California. If a contractor has particularly poor credit, cash may need to put up against the license instead of getting a bond.

What is a Disciplinary Bond and Why Might a Contractor Need One?

If a contractor has lost their license, a disciplinary bond may be required to reinstate the license or get a new license issued. Several requirements need to be met to get a new license or have one renewed under the California Contractors’ License Law. Contractors are required to file this type of bond in addition to the other types of bonds mentioned above, if applicable. The amount of the bond may vary depending on the violation and the reason for losing the license in the first place. What is known, however, is that the amount is not less than $15,000, but it won’t be more than “ten times” the amount of the contractor’s bond. Contractors must maintain a disciplinary bond for at least two years, but depending on the initial violation, it may be more to remain active in the California system. There various factors that come into play when a Disciplinary Bond is required including the delivery of paperwork within 90 days from the date of issue and more. We can help you navigate the process with ease and understanding.

We are Contractor Bonding Specialists

When it comes to dealing with California Contractor License Bonds, we are well versed in the requirements, responsibilities, costs, and renewals. What’s more, we can help you navigate applying for a disciplinary bond should you ever find your contractor license being revoked or suspended. Protecting yourself and your construction company is what matters most to us, and we don’t want you to feel overwhelmed by what is required to operate legally in California.

Contact us today to talk about contractor’s liability insurance and other coverage you may need to operate and protect your business with peace of mind.