Contractor License Bond
License and permit bonds, also known more simply as “license bonds” or “permit bonds,” are a specific type of commercial bonding. Government agencies require business owners in certain industries to purchase these bonds before they can be legally licensed. They protect consumers by guaranteeing businesses adhere to laws and other regulations enforced by federal, state and local government agencies.
Even though they’re actually a type of license and permit bond, contractor license bonds are often mistakenly grouped in with contract bonds since they’re used by construction professionals. Contractors must purchase these bonds before they can receive their contractors licenses at the state, county and/or city level. These bonds ensure that contractors follow all applicable licensing laws and regulations.
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A lot of companies quickly realize their insurance needs go beyond basic liability and commercial auto insurance. Some jobs require specific types of coverages such as contractors general liability insurance that gives you protection that may fall outside of basic coverage.
A Contractor’s Bond must be in place before CSLB can issue an active license, reactivate an inactive license, or renew an active license. (Business and Professions Code Section 7071.6).
The bond is filed for the benefit of consumers who may be damaged as a result of defective construction or other license law violations, and for the benefit of employees who have not been paid wages that are due to them.
Effective January 1, 2016, the required amount of a contractor’s bond or cash deposit with CSLB in lieu of a contractor’s bond is $15,000.
The bond for a qualifying individual is $12,500.
Requirements for the Contractor’s Bond:
- The bond must be written by a surety company licensed through the California Department of Insurance.
- The bond must be in the amount of $15,000.
- The business name and license number on the bond must correspond exactly with the business name and license number on the CSLB’s records.
- The bond must have the signature of the attorney-in-fact for the surety company.
- The bond must be written on a form approved by the Attorney General’s Office.
- The bond must be received at the CSLB’s Headquarters Office within 90 days of the effective date of the bond.
For More Information Visit CSLB.CA.GOV
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