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Congratulations on your journey to becoming a licensed contractor in California!  If you’re reading this, there’s a good chance you’ve reached the point in the licensing process where you’ve been assigned your application fee number by the Contractors State License Board and have received a letter indicating you need to show proof of bonding.  What’s the next step in obtaining a bond and filing it with the CSLB?  It’s actually quite simple as you’ll see below.

 The Bonding Process For New Applicants

The CSLB requires California contractors to post a $15,000 license bond, or cash equivalent, for the benefit of their customers or employee’s that can potentially incur financial harm as a result of a contractor’s actions.  To become bonded, an applicant would first obtain a bond quote by contacting a surety bond broker, such as our agency, or completing an online quote offered by some brokers on their website.  New applicants can obtain a bond quote instantly online from our agency using the “Get Quote” tool in the top right of this page.  If your letter indicates you must also provide a bond of qualifying individual (BQI) in addition to your license bond, you can also quote that bond online as well.

How Much Do Contractor License Bonds Cost?

For most surety’s, contractor license bond rates are generally credit based along with other rating factors.  Contractors license bonds function in a similar manner as a loan in that should a valid claim occur, the contractor is responsible for repaying the surety the amount of the claim, plus expenses.  This mechanism is called indemnity and is one way surety bonds differ from typical insurance that a new contractor may be more familiar with.  With this in mind, bond rates often range from around $100 per year for those with good credit, to well over $1000 per year for those with very poor credit depending on the surety and its underwriting guidelines.

Fortunately for some new contractors, we currently offer a bonding program through HCC Surety that does not take credit into account for the first year, if an applicant meets certain criteria such as not having a C-53 pool or a C-39 roofers classification and also having not had, or been affiliated with another contractors license in the past.  This program has saved contractors over $1000 in some instances.  For contractors that know they have poor credit, please contact our agency directly for an HCC quote, as these quotes are not available directly from our website.   If you think your credit is good (660-680 FICO or better), we think you will be very happy with our online bond quotes, which can be purchased online in just a few minutes.

What Happens After I Purchase My Bond?

After you purchase your license bond, your surety will electronically file it with the CSLB on your behalf.  The CSLB does not accept bonds in advance of their effective date, so if you wanted your bond effective date to be today, the surety would file your bond same day.  By contrast, if you choose an effective date 5 days in the future, your bond will be filed in 5 days.  With this in mind, contractors looking to have their bonding requirement satisfied as quickly as possible may want to choose an effective date closer to the present day.

As noted, our agency will ensure your license bond is filed on your behalf with the CSLB, which is important because the CSLB will ask you to show proof of bonding when submitting your application.  It’s important not to send the CSLB a copy of the bond we provide you following your purchase as this bond is for your records and will slow the bonding process because the CSLB will only accept the original signed copy which is sent electronically on your behalf.  At an applicants request, we can provide them with a signed, original bond at no additional cost.

As part of your bond package, our agency will email you a copy of your bond for your records and we will also send a copy by mail.  At this point the bonding process is complete until your bond is up for renewal.  Most new applicants can expect the entire bonding process including obtaining quote, purchasing their bond and having it filed with the CSLB to take no more than 5 minutes or so with our agency in most instances.  It’s that simple.  Have questions?  Give us a call!

 

By Jeremy Schaedler

 

 

 

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