What is a Contractor License Bond?
A contractor license bond is a financial guarantee that a contractor will adhere to California's licensing laws while performing work. It is a requirement set by the California Contractors State License Board (CSLB) for all licensed contractors. The bond serves to protect consumers, employees, and suppliers from financial losses due to a contractor's failure to meet legal obligations or contractual agreements
How Much Does a California Contractor License Bond Cost?
Bonds are priced based on the amount of the bond and your credit history and your financial condition.
Premium for the standard $25,000 bond limit is typically $250 to $500 per year and will vary based on personal credit history and bond limit. Note low personal credit scores, liens and judgments may trigger the Surety to decline the bond request.
How Does a California Contractor License Bond Work?
A California contractor license bond is an agreement between three different parties.
The Obligee
The local licensing authority is listed as the obligee of the bond, or the one mandating a bond be posted by the contractor.
The Principal
The principal is the contractor required to obtain the bond as a form of protection for their customers.
The Surety
The surety company provides the bond to the licensed contractor and pays any claims when they are filed. The contractor then repays the claim amount over time to the surety.
Can I Get a California Contractor
License Bond with Bad Credit?
The surety company reviews a contractor's credit history and financial condition to determine what the bond premium will be. Owners with low personal credit scores can still get a California Home Improvement Contractor License Bond, but the cost may be higher and collateral ( a deposit with the bonding company ) may be required but the Surety may decline depending on your overall credit score and financial condition even with collateral.