Need an LA Contractor Bond?
Los Angeles contractor license bonds are essential in protecting the public and your workers. It gives the client peace of mind that they are covered financially if there were any issues including an incomplete job or defective work, and it also ensures pay for the employees. Should the rare event occur of something going wrong, you are able to make a payout to those who have been harmed.
If you’re a construction contractor in the state of California, you may be required to obtain a Contractor’s License Bond. These construction bonds protect you and your clients. If anything were to go wrong, for example, faulty work that has not been corrected, then claims can be made against the bond. Construction bonds for contractors in LA can be very confusing, but a little understanding can go a long way in securing the public.
What are the different types of bonds and which suits me best?
There are a few different bonds to choose from and which one suits you best will vary. Contractors in LA must have the required $15,000 contractor license bond in order to be licensed by the state of California. Occasionally, a Qualified Individual bond may also be needed if the licensed contractor who is responsible for operations does not own at least 10% of the company. There are even more bonds, such as the bid and performance bonds, that are needed if you are working on public projects. If you are unsure if certain bonds are right for you, our contractor bonding services can help.
Contractor License Bonds – Why does it matter?
Los Angeles contractor license bonds are essential in protecting the public and your workers. It gives the client peace of mind that they are covered financially if there were any issues including an incomplete job or defective work, and it also ensures pay for the employees. Should the rare event occur of something going wrong, you are able to make a payout to those who have been harmed.
How do they work for LA contractors?
Los Angeles contractor license bonds work as a form of insurance for your clients should any financial harm hit customers and/or employees as the result of a contractor’s work, but it is not quite the same and shouldn’t take the place of business insurance. If a claim were to be made against the bond, an investigation would take place. If it is found that you are responsible, then your bond company will pay out up to the amount on your bond. You then must pay back the full amount paid, plus any legal fees.
To avoid this, you must follow the obligations on your bond. Make sure you understand completely what your bond is saying you must do to ensure no problems arise. This is often as simple as making sure you run your business in an ethical and responsible manner and fulfill your contracting duties.
If you are unsure and need clarification, then get in touch with a bond professional for advice.
How much do construction bonds for contractors in LA cost?
A contractor license bond costs a percentage of the bond amount required, which is at least $15,000 in the state of California. If you are registered as an LLC, then you are also a required a bond for $100,000 in addition to the initial $15,000 licensing bond. The cost is usually 1-10% of the amount, but what this number is exactly will depend on your personal credit history. You can get a free, no-obligation quote to help determine what you would be paying.
Will I be able to get a Contractor License Bond with bad credit?
Los Angeles contractors can still obtain a contractor license bond with bad credit. However, other bonds like the bid or performance bonds may be more difficult. Smaller contractors only have their credit to go by. If it is bad, then there is very little chance of getting a bid or performance bond. Bigger companies that may not have great credit usually have experience in the industry and strong evidence of financial status with CPA help, making them much less of a risk than smaller contractors.
How do I get a Los Angeles contractor license bond?
First, you will need to ensure you follow California’s requirements for contractor license bonds, including owning at least 10% of the contracting company. Then, apply and get approval. You will then need to sign an indemnity agreement and send it to the state. Be sure to keep copies for yourself!
Bonds can be confusing, so it is always recommended that you work with contractor bonding services when it comes to securing Los Angeles contractor license bonds. We can help find the best rates and answer any questions you may have. You will work with a bond professional who will have your best interests in mind and help in the event of a claim. Contact us today to get started securing construction bonds for contractors in LA.
Learn more about the different type of contractor bonds we offer here.