Bond for Contractors in Sacramento, CA
Did you know that if you are a Sacramento contractor that you are required by the state of California to obtain a contractor license bond? These bonds are designed to protect the public from being left out of pocket due to faulty or an unfinished job. There are also other bonds you may need to be able to do public work. Which ones you need, how much you pay, and what it entails can be confusing.
What bonds are required for Sacramento Contractors?
First of all, contractors in California must have a contractor license bond. This is required in order to get a contractor license. These bonds are required to be at least $15,000. If you do not own at least 10% of your contracting company, then you may also need a qualified individual bond. Working on public projects? Then you will also need a bid bond and/or performance bond. If you’re not sure what your business needs, our contractor bonding services can help determine the bonds that suit you best.
Contractor License Bonds – How do they work?
You must have a contractor license bond in Sacramento as a way of protecting clients and employees financially. If a fault was not corrected or employees did not get paid, then the bond would pay out up to the designated amount (at least $15,000.) Although it is a form of insurance for your client, they do not protect your business and should not take the place of business insurance.
If there was a claim made against your bond, an investigation would first take place to determine if a payout is in order. If that is the case, then the bonding services company will release the payment to those entitled. It is then down to you to pay back the full amount paid to the bonding services company, including any legal costs. Claims can often be avoided if the company just follows the terms of the bond, which is to follow the Division 3, Chapter 9 of the Business and Professions Code and carries out business in a responsible manner. It is always recommended that you work with a bond professional to be able to answer any questions for you and help in the event of a claim.
How much do contractor license bonds for Sacramento cost?
Sacramento contractors pay a percentage of their bond, generally 1-10%. Although this is normally $15,000, if you are registered as an LLC then you are also required to have a bond of $100,000. What you will pay is determined by your personal credit score.
If you have bad credit, then you can still get a contractor license bond, but bid and performance bonds are difficult to get, especially if you are a smaller company. Smaller companies carry more risk while bigger companies tend to have more experience and demonstrable ability to carry out the terms of the bond.
How do I get a contractor license bond in Sacramento?
If you own at least 10% of your contracting company, then you qualify for a contractor license bond. Just apply and get your approval (usually instantly). You will then need to sign the indemnity agreement and send that along with any other required paperwork to the state who will send you a contractor license. You should always make copies for yourself.
Sacramento contractors may find the whole bond process daunting. Our bond professionals make the process easy for Sacramento contractors. From determining the right bonds and finding you’re a great rate, to providing a free quote and handling any claims, your bonds will be handled in a stress-free way for you.
Visit our hompage for additional information on our contractor bonding services.