Contractor's License Bond

Bond Penalty: Varies by State and Municipality

A "contractor's bond" is one of the most common surety bond needs in the North American market. There is often some confusion about what exactly a contractor might need when he or she is told to provide bond. Private and public project owners, state licensing boards and local municipalities all may require a contractor to file a surety bond of one type or another to guarantee very specific things. These are the categories:

  • License & Permit Bonds (L&P) - required by states and municipalities to issue a contractor license. These may be simply "obey the code" obligations, or can include onerous wage guarantees.
  • Third Party Fidelity Bonds - also known as dishonesty bonds, insure dishonesty losses resulting from the contractor and his or her employees' actions while providing services on a client's premises (this is what a party refers to when he says, "We are bonded.").
  • Contract performance bonds: bid bonds, payment and performance bonds for particular projects.

This page will explain contractor's license (permit) bonds. Follow the links provided for fidelity and contract surety bonds to learn more about those obligations. A license bond may be required from any type of contractor. A local permit bond may be required by cities, townships and counties. These surety bonds are generally simple compliance obligations which guarantee that contractors will follow the local codes and deal honestly with clients. Here are some examples:

Many states identify contracting businesses by class of work and impose surety bond rules specific to each class. A license bond may be required by a state agency, ontain more onerous language than a local permit bonds and carry a higher penalty. Here are some examples:

State contractor license bonds generally guarantee an applicant's adherence to state licensing statutes, fair dealing with clients, compliance with prevailing contract law and building codes. These surety bonds can however also be significantly more onerous. For instance, the Washington Continuous Contractor's Surety Bond guarantees the payment of wages and benefits to persons furnishing labor to the contractor, damages for breach of contract including negligent or improper work in the conduct of the contracting business, amounts due to parties that rent or supply equipment to the contractor and taxes/contributions due to the state. Other contractor permit bonds may apply only to GCs that are domiciled in a state foreign to the work site such as the Connecticut non-Resident Contractor Verification Bond.

Blasting Contractor Bond

Blasting is among the riskiest contract activities. The risk of damage to foundations, earth walls, the disturbance of natural stream and other effects due to the seismic blow of blasting activity are high. Glass and other more fragile structures above ground can be damaged by shock waves. Very few surety companies have an appetite for this class of contracting work. Working with a surety underwriter with experience in the sector and authority to bind blasting operator bonds is imperative. We offer blasting operator surety bonds to qualified individuals in all states and municipalities where required.

National surety bond leader, Surety One, Inc. is a specialist in providing for the bonding needs of general and specialty contractors. We offer this class of surety bond and performance bonds to all applicants in EVERY state where contractors must be bonded. Although personal credit is a factor in surety bond underwriting, we have programs to fit every credit condition. Call (800) 373-2804, email Underwriting@SuretyOne.com or click here for a live chat regarding a contractor's license bond application or to discuss your particular needs.

Surety bond application review and quoting are free of charge. There is no obligation to purchase.

What We Need From You

Additional Attachments

  • Business Financial Statement (if bond over $25,000)