Texas Contractor License Bond

Get Your Texas Contractor License Bond

Again this is going to be different based on the city you're getting licensed in and/or the single project you're' bidding on.

Just to recap:

A contractor license bond is required by a government agency to have a license or permit issued so you can do work in that county or city.

A construction bond is required by a project owner so you can bid on and complete a single project with a set timeframe.

Each city has its own laws regarding how a contractor gets licensed, for example:

• The City of Galveston required all contractors except HVAC licenses to purchase a contractor surety bond
• The City of Amarillo has different bond amounts for each license classification
• San Antonio only has a few contractor classifications that require a surety bond

When it comes to construction bonds like bid bonds and performance surety bonds, these are up to the project owner.

But in nearly every case, if you're required to bid on a project, you will be required to purchase a couple construction bonds to have your bid even considered for the job.

Why is a Texas Contractor License Bond Required?

Think of a surety bond as a contract of trust between two parties who have never worked together before.

When you're getting licensed, the state, county or city that issues you a license is signaling to the public that you are a licensed professional the public can trust to hire.

It's their job to protect the public from fraudulent businesses and that's what the surety bond does. It holds contractors accountable.

Listen, of course governments would probably love to inspect every project and aspect of your business. But that's not realistic. So the surety bond is their next best option.

If a contractor causes a customer financial damages as a result of fraud, the customer can make a claim against the contractor's surety bond for financial compensation.

Common examples of fraud include:

• Stealing a deposit and abandoning the job
• Swapping out materials for cheaper ones only to pocket the savings
• Not following building codes
• Failing to pay for materials or work and sticking the project owner with the bill

When a contractor has a successful claim against them, they have to pay the insurance company that underwrote their bond the full amount of that claim.

And in most cases until the situation is remedied, they will have their license suspended. This is why a contractor needs to be bonded.

How Much Does Texas Contractor Bond Cost?

Contractor License Surety Bonds

In most cases, for local county or city bonds we can offer you low fixed prices that do not require a credit check.

We are Surety Bonds Direct, a surety bond agency. We exist to help contractors find the surety bond they need and pay the lowest possible price.

We do this by having a network of A-rated sureties we can price shop with.

And like mentioned above, for most local bond requirements we've secured low pricing and no credit check so you can purchase your bond today.

Construction Surety Bonds

When it comes to construction bonds, you will likely always need a credit check of the owner and/or owners to get bond pricing.

The reason is construction projects having larger surety bond amounts and more risk.

So an insurance company takes into account the:

• Personal credit of the owners
• Industry and project experience
• Bonding history of the owners

For most construction projects the rate is set at 3% of the winning (adjusted) bid/project amount.

However, with strong credit and a resume or similar completed projects, we have helped contractors get lower rates which increased their profitability.

How Long Does A Texas Contractor Bond Bond Last?

Contractor license bonds need to be renewed on a set schedule. Most of the time this 12 months. This means when you purchase your bond, it's one payment for a 12 month period.

However, as your bond specialist because we can offer many contractor bonds for a multi-year term of two or three years.

When you purchase your bond through us, we can offer a discount on these longer terms.

For construction surety bonds, the bond remains active until the project is over. Once the project is completed the project owner can release the bond so it doesn't have to be renewed.

You only need to renew a construction bond if the project extends beyond a 12 month period.

Need Help Getting Your Texas Contractors License?

We are constantly adding new content and updated content about how to get licensed in Texas.

Here are our current articles detailing the license and bond requirements in Texas:

• City of Fort Worth contractor bonds
• City of El Paso contractor bonds
• City of San Antonio contractor bonds
• City of Amarillo contractor bonds
• City of Galveston contractor bonds

We will continue to update this list.

Whichever county, city, or project you need a surety bond for now, request a price quote and tell us about your bond.

We will be able to help you get this process done well within two business days.