Why do California Contractors need a Bond?


construction bond

A contractor bond is a contract in which a surety company promises that the contractor listed on the contractor’s license bond they have issued will not commit any violation of contractor license law within the state that they are licensed. California requires that all contractors have a $15,000┬ábond. So besides the fact that it’s the law, here are the reasons why every contractor needs a contractor bond.

License Suspension

The California Contractors State License Board (CSLB) keeps tabs on contractors that have bonds and those that don’t. If you cancel your bond, the surety company with which you had the bond must send a cancellation notice to the CSLB. If a bond reinstatement notice is not received by the CSLB or a replacement bond is not received by the CSLB within 30 days from when they receive the cancellation notice, your contractor’s license will be suspended.

In California, it is usually illegal for an unlicensed individual to perform contracting work on any project valued at $500 or more in labor and materials. Without a license, you are very unlikely to get hired, and if you are hired, if you are caught working without a license you can face serious charges from the CSLB.

A Sound Surety Company

If you are a contractor you probably already know that construction projects don’t always work out as planned – even when everything seems to go accordingly. Whether because of human blunder, broken materials, or climate related, claims against a surety organization might be recorded by any persons harmed by stiff-necked and planned infringement of a development contract. So regardless of the possibility that you’re not by and by at issue, or it was not thought, despite everything somebody may document a case against your organization. In the occasion this happens, the surety organization with which you hold your permit bond will pay out the case.

Since a contractor bond is not insurance, on account of a mischance claim payout you should reimburse the surety organization any sum paid for your sake. Experienced surety organizations will work to secure you against off base, pointless, or deceitful cases, so thus it’s imperative to locate the most dependable and experienced surety organization for your contractor bond. The more experience they have battling claims the to a lesser degree a chance you will need to pay out a case one day and the more your organization is secured. As always, be sure to shop with multiple companies for the best bond pricing.

More Business

California contractors usually are required by law to disclose to homeowners whether or not they have a contractor’s license bond. If you don’t have a bond, homeowners, and other clients are more likely to choose another contractor.