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Contractors Bonds

What is an Alabama Contractor License Bond?

Alabama requires all licensed HVAC, Refrigeration, and Residential Roofing contractors to purchase a surety bond before a license application can be submitted. Many counties, cities, and towns have their own bonding requirements for contractors doing work in that area.

This surety bond, called a contractor license bond (also referred to as a permit or performance bond in Alabama), is a type of insurance contract acting as a financial guarantee that you'll follow all Alabama building codes (including local building codes) and regulations, plus follow through on your contracting obligations to your customers.

When you purchase a contractor license surety bond, you're making this promise to the licensing authority issuing your license, or requiring the permit, and to your customers.

Purchase Your Alabama Contractor Bond Today

Contractor Bond - Heating & AC
Contractor Bond - Refrigeration
Contractor Bond - Heating & AC and Refrigeration
Contractor Bond - Residential Roofer

$10,000 Bond

Expires 12/31

Contractor License Bond - Filed with City, County or Other Local Government

Bonds up to $25,000

1-Year Bond Starts at $100.00
1.0%-1.8% of the Bond Amount

2-Year Bond Starts at $175.00
1.0%-1.8% of the Bond Amount

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Who Is Required To Purchase an Alabama Contractor Bond?

At the state level, Alabama only requires the following licenses to purchase a contractor license bond:

  • Heating and Air Conditioning contractor
  • Commercial Refrigeration contractor
  • Residential Roofing contractor

There are many cities that require contractors to purchase a license bond or a right-of-way/permit surety bond before a license can be issued or a project can start.

Some of the more common cities we've helped contractors get bonded in are:

  • Birmingham
  • Mobile
  • Montgomery

You may run into a contractor bond at any county or city level. You'll learn about this bonding requirement when you:

  • Research contractor licensing laws in the county or city
  • Obtain the necessary permits for a specific job
  • When a local government tells you to get bonded for a government job

If (and when) you run into any contractor bonding requirement, fill out our online quote form or call a bond specialist at 1-800-608-9950. We will be able to help you save money and get the bond you need fast.

Request a FREE Price Quote Today

Let us price shop for you and find the lowest possible price. This costs you nothing and there's no obligation to buy once you get pricing.

Need Help? Call Us Today

Talk to a bond specialist today. They will help you find the contractor bond you need and get you the lowest possible price. 1-800-608-9950

Why is an Alabama Contractor Bond Required?

The Alabama Board of Heating, Air Conditioning & Refrigeration is responsible for licensing HVAC and refrigeration contractors.

The Alabama Home Builders Licensing Board is responsible for licensing both residential home builders and residential roofers.

The Alabama Licensing Board is responsible for licensing general contractors in the state.

And each city may have its licensing agency requiring either a license or permits for a contractor to perform work in their city limits.

These licensing processes ensure each contractors has:

  • Accumulated a minimum level of experience
  • Obtained the necessary level of education and passed the appropriate exams
  • Submitted the proper business records
  • Purchased required insurance policies

The contractor license bond many be one of the required insurance policies before a licensing application can be submitted or because a permit can be issued for a project.

What Does an Alabama Contractor License Bond Protect Against?

It doesn't matter what type of contractor license or permit requires a surety bond, this bond serves the same purpose.

A contractor bond is a type of insurance for the protection of the contractor's customers and hired subcontractors.

Alabama wants to protect the public from unqualified professionals. This is why the licensing process is required by law.

Unfortunately, there will always be a small number of licensed contractors who purposefully make decisions to increase profits and financially harm their customers in the process.

These fraudulent actions can include:

  • Breaking the terms of a construction project
  • Altering project terms without the customers knowledge
  • Taking deposits or down payments and never starting or completing a project
  • Changing building materials without the customers consent
  • Failing to pay subcontractors for completed work
  • Failing to follow building codes and purposefully performing poor quality work

If a contractor is found guilty of any of these actions, a claim can be made against the contractor bond for financial repayment.

The amount of coverage only extends to the bond amount.

The Alabama Contractor Bond Amounts

Here are the bond amounts for many of the most common bonds required in Alabama.

Bond Type Bond Amount
HVAC and Refrigeration Contractors $15,000
Residential Roofing Contractors $10,000
City of Mobile Contractors $10,000
City of Montgomery Electrical Contractors $5,000
City of Montgomery Plumbing Contractors $5,000
City of Montgomery Roofing Contractors $10,000
City of Birmingham Electrical Contractors $10,000

The bond amount is set by the appropriate licensing and/or permitting authority. This bond amount is not the price of the bond.

The amount is the maximum coverage available to customers and subcontractors of a contractor in the event they fall victim to purposeful misconduct or fraud by the contractor.

How Much Does an Alabama Contractor Bond Cost?

The cost of an Alabama contractor license bond is based on a rate quoted by a surety.

A surety is an insurance company that underwrites the surety bond. And like any insurance company, the rates they charge are based on their own internal assessment, typically taking into consideration these three factors:

  • Personal credit
  • Contracting experience and industry experience
  • Any prior bond claims if you've been licensed in the past

This is why it's important to work with a specialized surety agency like Surety Bonds Direct.

We work with multiple A-rated sureties to find our customers the lowest possible price. And, currently, for all Alabama bonding requirements we can provide either a:

  • Low fixed price with no personal credit check
  • An instant price for a city bond

Here is a table for with the prices for the state level bonds.

Bond Type Pricing Options Purchase
Contractor Bond HVAC $150 for 1 year term Click to Buy
$262.50 for 2 year term Click to Buy
$375 for 3 year term Click to Buy
Contractor Bond - Refrigeration $150 for 1 year term Click to Buy
$262.50 for 2 year term Click to Buy
$375 for 3 year term Click to Buy
Irrigation Contractor Bond $150 for 1 year term Click to Buy
$262.50 for 2 year term Click to Buy
$375 for 3 year term Click to Buy

From our experience helping hundreds of Alabama contractors, the price to purchase a city required contractor bond starts at $100 and rarely goes above this.

If you require a city level contractor bond, use our free online quote request form to find your exact pricing or call a bond specialist at 1-800-608-9950.

We'll be able to get your pricing immediately.

Request a FREE Price Quote Today

Let us price shop for you and find the lowest possible price. This costs you nothing and there's no obligation to buy once you get pricing.

Need Help? Call Us Today

Talk to a bond specialist today. They will help you find the contractor bond you need and get you the lowest possible price. 1-800-608-9950

What Happens After You Purchase Your Bond?

After you purchase your bond, Surety Bonds Direct's issuing department will prepare your bond with the correct signatures, seals, and the required power of attorney so the Alabama authority requiring the bond will accept it.

We guarantee your bond will be accepted or we'll fix the issue or refund your money back.

For most contractor bonds, we will email you a copy of the bond so you can sign and submit it to the licensing or building agency requiring the bond.

For Residential Roofing bonds:

  • We will email you a copy of the bond
  • You need to sign it and mail the bond back us
  • We will submit the bond to the Alabama Home Builders Licensure Board

This process is required because in the recent past there have been issues with forged signatures. The Home Builders Licensure Board now requires the surety agency to submit the bond on behalf of the contractor.

If you're a residential roofer, this is a good reason to purchase your surety bond as soon as you can. You don't want the reason for a delayed application to be because you're waiting for the mail system to deliver your bond to us.

Get this done!

Renewing Your Contractor Bond

As you saw in the bond pricing section, you can choose between a one, two, and three year bond term for many of these bonds.

This bond term is the length of time the bond remains active before it must be renewed.

Renewing your bond is as easy as paying the renewal premium.

Your bond specialist will reach out to you 30 to 45 days in advance of your renewal date to make paying the renewal premium easy.

This Contractor License Bond is Continuous

A continuous bond means the original bond remains active as long as you pay the renewal premium.

Most of the time, you never have to worry about having a new bond issued or re-submitting your bond each renewal period.

If we find you lower pricing during the bond renewal period, we'll secure you the lower priced bond. In this case you will have to submit the bond to the appropriate licensing authority so they know you're still actively bonded.

Contractor Bonds And Getting Your Alabama Business License/Registration

Because the majority of contractor bond requirements are so localized, it's hard to outline the licensing process for each locality.

We have articles written that outline how to get an Alabama HVAC and Refrigeration license and an Alabama Residential Roofer license.

At a high level the steps to get your HVAC and Refrigeration license are:

  1. Determine if you're going to get licensed through examination or reciprocity
  2. Take the appropriate exams or show proof of schooling
  3. Choose your licensing status
  4. Purchase the contractor bond referred to as a performance bond
  5. Ensure all required paperwork is submitted with the application

At a high level the steps to get your HVAC and Refrigeration license are:

  1. Have your business structure and ownership in order
  2. Designate the Qualifying Representative (DQR)
  3. Purchase the required contractor surety bond
  4. Complete the application and have the Oath or Release for the DQR and the Oath of Release for the Business Entity notarized