What Are The City Of El Paso Contractor Surety Bond Requirements?
The City of El Paso Texas requires contractors performing work within the city limits to purchase a surety as one of the primary steps in the registration process.
If this is your first time getting licensed in El Paso, you may have never heard of a surety bond before.
And that's why in this short article, you'll learn:
- What this contractor surety bond is
- What are the bond amount and pricing
- How to purchase your bond and save money
What is the El Paso Contractor Surety Bond Requirement?
Again, it's not uncommon to ask what is a surety bond if this is your first time getting licensed in El Paso.
Texas is one of the few states that does not have a state-wide contractor bond requirement. So unless you're in a city that has their own requirement, you've probably not been exposed to surety bonds yet.
A surety bond is a legal contractor (special insurance policy) you purchase for the protection of your customers.
That's what makes it unique.
It's the only tool the City of El Paso has to hold contractors they issue licenses to accountable to following the contracting laws in the state and city.
In the simplest terms... this surety bond is used to deter contractors from committing purposeful fraud against their customers.
Who Is Required to Purchase an El Paso Contractor Bond?
Not every license registration is required to purchase a surety bond to have a license issued.
Here are the registrations that require a surety bond with the bond amount next to them. I'll explain the bond amount next.
| License Registration | Bond Amount |
|---|---|
| General contractor registration | $50,000 |
| Barricate registration | $50,000 |
| Engineering general contractor (pavement cuts) | $10,000 |
| Irrigation installations | $10,000 |
| Site lighting and lighting landscape installations | $10,000 |
| Temp structure placements | $10,000 |
| Mobile placement permits | $10,000 |
| Temp sign permits | $10,000 |
| Tents in excess of 200 sq ft | $10,000 |
| Fencing | $10,000 |
| Patch and paint permits | $10,000 |
| Pavement cuts or excavation in the public right of way | $10,000 |
| Sign contractors (non-electrical) | $25,000 |
| Large sign installer (billboards) | $50,000 |
The bond amount is set by the city of El Paso. This is called the penalty because if a contractor is found guilty of fraud this is the maximum amount any single or multiple claims can be.
What Does a Contractor Bond Protect Against?
As we've mentioned this bond protects customers in the event of purposeful fraud. Examples of this fraud includes:
- Breaking the terms of a construction project
- Amending the contract without proper notice
- Taking deposits and never starting or completing a project
- Requiring overly large project deposits
- Replacing agreed upon materials with cheaper alternatives to increase profits
- Failing to pay subcontractors for completed work
- Failing to follow building codes and purposefully performing poor quality work
So if a contractor is found guilty of these or similar actions, the customer can make a claim against the surety bond for financial compensation. The available compensation is capped at the license's bond amount.
How Much Does an El Paso Contractor Bond Cost?
At a high level the price of a contractor surety bond is determined by an independent assessment from a surety.
A surety is the insurance company that underwrites contractor surety bonds.
And just like traditional insurance, like general liability, the price of a surety bond tends to depend on the personal credit scores of the owner or owners.
The sureties will also look at the:
- Contracting industry experience
- Bond history if an owner has been licensed in the past
From these three primary factors a rate will be quoted and this rate multiplied by the bond amount is the price you'll pay for your bond.
How to Get The Lowest Possible Price For Your Bond
We are Surety Bonds Direct, a specialized surety agency. Our sole purpose is to price shop for you and find the lowest price, saving you as much money as possible.
We're able to do this because we have a network of A-rated sureties who specialize in contractor bonds. So we can collect rates and provide you with the lowest one.
Here are some examples based on the $50,000 general contractor bond. The rates go from really good to about average.
| Bond Amount | Premium Rate | Total Cost |
|---|---|---|
| $50,000 | 0.5% | $250 |
| $50,000 | 1.0% | $500 |
| $50,000 | 2% | $1,00 |
| $50,000 | 3% | $1,500 |
| $50,000 | 4% | $2,000 |
It's easy to get your exact pricing by having us price shop for you. Just request a price quote with our online quote form. You can also call a bond specialist at 1-800-608-9950 to speak with a real human.
Keeping Your Bond Active Year To Year
Once you're ready to purchase your bond, all you have to do is complete an online order form.
After your purchase is complete, we'll have your bond issued to you within a few hours. This entails ensuring the:
- Correct bond form is filled out correctly
- Having the required power of attorney attached
Once you submit your bond to the City of El Paso, you need to ensure it remains active as long as you're doing it within the city.
All surety bonds have a bond term of 12 months at which time they need to be renewed for the following year.
This is a great reason to work with a surety agency like us because we manage your bond for you.
As your bond expiration date approaches, your bond specialist will email and call you with pricing for the next year. Plus if you have to make any changes or updates to your bond, this is the time to do it.
Once you pay your renewal premium your bond remains active for the next year.
That's the City of El Paso's Contractor Bonding Process
If you're getting your license/registration in El Paso, we can help you get your bond for the lowest price and have the process one in one day, two at the very most.
Click here to submit a price quote and let us get to work for you.
If you have any questions please contact us or call 1-800-608-9950.
