Specifically designed for contractors and builders, contractor license bonds are a type of surety bound. Contractors are required to carry a contractor license bond to obtain and keep their licenses, in most states. Contractor license bonds are designed to protect consumers and employees who are owed unpaid wages. They ensure that contractors operate in compliance with local and state laws.
Insurance companies typically issue contractor license bonds, which serve as a contract between the surety, the contractor and the client. Contractor license bonds are fully indemnified. If a surety on behalf of a contractor pays out a claim to the obligee, the amount of the claim is the responsibility of the contractor.
Like most other commercial surety bonds, contractor license bonds are underwritten. The contractor’s credit score and existing claims on his license determine the license bond premiums. In some cases, like bankruptcy or a newly licensed contractor, a surety company may ask for personal and company financial statements to determine the cost of the premiums.
McGovern Insurance is an experienced insurance and bonding agency that understands contractor license bonds. Call us at (650) 593-8216 or complete the form on this page to get your personalized contractor license bond quote.