In the state of California, contractors, including roofing contractors, are required to have a contractor bond, which is a form of a surety bond involving three parties.
The contractor is the principal, the obligee is the state of California, and the insurance company writing the bond is the surety. It provides protection to the contract employee or customer from poor work by contractors. The state is also protected against any failure of the contractor to follow the laws.
A roofing contractor undertakes work related to the installation and repairing the parts that either seal, waterproof or weatherproof construction projects. Roofing contractors provide services that prevent water or other compounds from penetrating into the structure inner spaces.
A Roofing Contractor bond holds a contractor responsible for the business decision they make. The bond also assures the state of the contractor’s trust and reliability in making ethical decisions.
The California Departments of Consumer Affairs requires all roofing contractors to obtain a Roofing Contractor Bond for the State licensing board. A roofing contractor should execute the roofing contractor bond in total agreement with section 7071 subsection 6 and 8 of the California’s business and professional codes. The bond is to be in the amounts of $12,500 for a qualifying individual. As from first of January 2016, the contractors are required to make a $15,000 cash deposit or a contractors bond with the licensing board.
Bond Requirements for Roofing Contractors
The contractor bond has to be in writing and prepared by a surety who is licensed to offer such services by the California state department dealing with insurance. For a registered business, the bond has to be in the amounts of $15,000 and $12,500 for qualifying individuals. If operating your business as an LLC a separate $100,000 LLC bond is required in California.
Regardless of the contractor’s status, the license number and the official business name on the bond must exactly match with the license number and official name entered on the California licensing board records. A slight deviation will lead to cancellation of the bond.
The contractor bond must bear the actual signature of the company providing the surety. The contract has to be written in the form approved by the office of the attorney general. The delivery of the bond to the licensing board is strict. Our surety companies file the bond electronically directly with the CSLB.
Disciplinary and License Bonds for Roofers
If a roofing contractor bond is canceled or revoked for violation of the contractor’s licensing laws, a disciplinary bond is filled with the bond registrar for its reinstatement. The conditions for the disciplinary bond are strict, as it cannot be combined with any other. The amount of the disciplinary bond varies with the nature of violation conducted to the discretion of the registrar. However, the amounts cannot be less than $15,000 or exceed ten times the bond value. Disciplinary bonds must current for at least two years but may be extended at the registrar’s request.
Like the contractor’s bond, the disciplinary bond has to be prepared by a licensed surety in a form approved by the attorney general. The names and license number on the bond must correspond with those held by the licensing board. Additionally, it has to be in the licensing board’s headquarters on or before 90 days of its effective date. It is, therefore, important that contractors adhere to the laws as the only way of avoiding this high cost of a disciplinary bond and protecting their reputation.
Our agency works with roofing contractors on a daily basis, and we understand the unique needs of roofing contractors. Contact us today with any question you may have regarding your bonding needs!