Category Archives: Construction

All About Contractor License Bonds

Contractor Bonding

Construction contractors require being either licensed or registered with their local authorities or state. This process often needs a contractor license bond. A contractor license bond can be described as a kind of surety bond, i.e., an agreement between 3 parties: surety (the bond provider), the obligee (this is the entity that needs bond such as a state) and the principal who is the contractor. A contractor license bond acts as a form of guarantee that the contractor will comply with every regulation that is imposed by the respective local authority. It is concerned with the general compliance with statutes of a license. In other words, it is a surety line of credit for business. It provides additional protection for your clients that you will diligently fulfill your work.


Before a surety issues a contractor with a license bond, through scrutiny is conducted on your business and financials to ascertain that you can successfully fulfill your obligations.

This means that if a contractor fails to comply with the regulations resulting in damage to any party covered by the bond, then a claim can be legally filed. If the contractor’s actions are determined to e unlawful, the surety covers the immediate costs but up to the penal sum of the license bond. It should be noted that the contractor will be required to reimburse the money soon after by the indemnity agreement which, constitutes the bonding process.

Contractor bond cost

The cost of contractor license bond is normally in the range of 0.75%-2.5% of the entire amount. However, the percentage amount is a factor of business and personal status, i.e., business experience, financial statements and credit score. Construction contractors with excellent overall conditions pay less compared to those bad credit.

Also, each local authority and state has varying requirements about the bond amount.

How to decrease contractor bonding cost

There are some effective techniques for reducing the contractor bond cost; these include the following:

Credit score – The credit score ought to be high for one to pay low amounts.

Overall financial status – It is good and advisable to showcase good liquidity and strong financial statements.

Provider – Select a good surety bond provider.

Who requires it

A contractor license bond may be required from Home improvement contractors, Carpenters, Roofers, Electricians, Plumbers, HVAC contractors and General Contractors.


Contractors who have breached the agreement of the contractor bond can face a claim as earlier mentioned. This may be due to non-compliance with local regulations or state regulations, failure to declare taxes and pay them, use of fraudulent business methods, etc.

It should be noted that bond language, as well as forms, vary depending on location. If a claim is made, there are several actions that can be sought such as out-of-court settlement and it is the most highly recommended. Alternatively, the matter can be taken to court for settlement.

Unfortunately, if the court case is lost, then you will be forced to compensate the claimant financially up to the whole penal sum of the bond.

The above insightful information outlines in detail all about contractor license bonds, knowledge of such is important for those in the business as ignorance is no excuse.…

How Can Your General Liability Insurance Cover Your Hired Auto For Construction?

In California, most of the construction business owners are well aware of the concept of auto insurance, and thus they always look for a good GLI product that can give them auto insurance coverage too. With this, they can easily avoid the big expenses that can arise due to the accident in the workplace. Starting from the vehicle repair cost to medical expenses of the victim, you can pay off everything from the insurance coverage itself. But what if you have vehicles that you have hired form a different source and not belong to your company? If your non-owned or hired vehicle meets with an accident in the workplace, then who will pay the cost of the repair or the medical expenses of the victim? Certainly, your conventional auto insurance not covers these expenses. This is the reason for this kind of cases you have to take the help of the non-owned auto coverage from your general liability insurance company.

Include hired auto coverage in your GLI bonds                                    

There is no guarantee that when your employees use their vehicle or hired vehicle for your business work, then they will not meet with an accident. If it happens, then you have to face big expenses to compensate for the damages to the vehicle or for the medical expenses of the victim which will eventually eat up a larger part of your business capital. This is the reason now every construction business company adds the auto coverage for hired and non-owned auto clause to their general insurance bonds.

If you add this clause to your GLI bond then in the event of an accident with your hired vehicle for construction job your general insurance can take the responsibility to pay off the charges. Though it is true that for that you have to shell out a more money but on the other hand with this step, you can easily save your company form big losses. By asking your general insurance provides you can add this auto coverage to your policy and work at peace.