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Spotlight: Contractor License Bonds

Spotlight: Contractor License Bonds

Contractor License Bonds Are Required!

Almost every state in the country requires that certain types of contractors post surety bonds to obtain various licenses and permits. The bonds are required for both residential and commercial contractors engaged in various construction trades including general home improvement, electrical, roofing, drywall, HVAC, plumbing, and many other specialties.

Contractor license bonds are required both at a state and local municipal level. In addition to license bonds mandated by states, many cities and counties require permit bonds for roadwork, grading, right-of-way, sewer, and many other construction projects. Bond amounts, or coverage provided to third parties, typically range from $10,000 to over $100,000. The bond amount is set by the obligee and is usually a fixed amount based on the project, the contractor classification, or the volume of work.

Contractor License Bond Protection

The bonds generally protect third parties in the event that the contractor commits fraud or violates applicable codes or laws in the execution of construction contracts. While required by law to some degree in almost every state, the top states for contractor license bonds are California, Oregon, Washington, Ohio, and South Carolina.