Looking to obtain a California contractor license? Did you know that before the CSLB may grant, reinstate, or renew an active license, applicants for a contractors license must secure a $25,000 contractor license bond? To ensure that you are always prepared to take on the next task, read on to learn everything you need to know about contractor license bonds, commonly referred to as surety bonds. 

What is a bond for a contractor's license?

The CSLB started imposing contractor license bonds in the 1960s, when they were first required to be in the amount of $2,500. A recent rise from $15,000 to $25,000 in the necessary bond amount occurred in January 2023. A California contractor license bond is a sort of surety bond; it is not insurance, and contractors are still financially liable for any paid claim made against the bond. Its purpose is to safeguard customers and underpaid workers.

All persons and organizations performing construction or contracting work inside the State are required to post a licensing bond. 

Once more, the goal of a contractor's bond is to protect customers from unfavorable or careless activities of a contractor rather than to immediately benefit the contractor. 

A contractor license bond IS NOT insurance, as was already stated. You need general liability insurance to cover both you and your company. 

What Is the Price of a Contractor License Bond?

Contractor license bonds can cost between $109 and $2000 or more, depending on a number of variables such personal credit, the history of prior licenses, the term limit, and the kind of license. The standard bond duration is one to three years, however certain assurance companies may grant longer terms if certain conditions are met. 

How does one go about being bonded?

Locate a Bond Issuer: Seek for a Surety Bond Company that is Licensed and Approved to Issue Contractor License Bonds in California.

Application Methodology: Request a quote here. Be prepared to supply facts regarding your license classification(s), personal and company information, and the bond amount you desire.

Approval & Underwriting: An underwriter will examine the application and evaluate the applicant's financial standing and creditworthiness.

Pay the Premium: Accepted applicants are obligated to pay the bond provider's premium. This is the price that the bond incurred.

Bond Issuance: The contractor license bond will be issued by the bond company when the premium payment has been completed.

Bond Submission to CSLB: As part of the contractor license application, the CSLB must receive a copy of the bond. 

Maintain Bond Coverage: Contractor license bonds have a set duration of validity, usually between one and three years. An individual or business must renew a bond prior to the expiration date in order to keep their license in good standing.

Respond to Claims: The bond holder is required to assist the surety company's investigation in the event that a claim is legitimately made against the bond.

For people and companies aiming to become licensed contractors in California, obtaining a contractor license bond is a crucial step. This surety bond is required by the California Contractors State License Board (CSLB), and it acts as an essential layer of defense against any financial loss caused by a contractor's conduct for both the state and its citizens. 

Although navigating the world of contractor license bonds may seem difficult, you can confidently start down your route to licensing with the help of professionals and reliable resources. 

You can find more information on the CSLB website: https://www.cslb.ca.gov/contractors/maintain_license/bond_information/bond_requirements.aspx

On that site, there is a list of companies with endorsements on file with the CSLB you can contact for your Contractor’s Bond as well as all the requirements broken down. We hope this helps you on your way to becoming a Contractor. 

But Advanced, why are you trying to help up-and-coming Contractors, isn’t that your competition? Good Contractors are highly valuable in Los Angeles, and we welcome the competition! There are more than enough homes in Los Angeles that need a good Contractor, and we want to support a high standard for the industry all around. We don’t take on every job available to us, and keep a handful of contacts to other amazing Contractors we can recommend to homeowners when a job isn’t the right fit for us, so it’s important to “build” a community of excellent Contractors to work alongside of. We love what we do, and if your dream is to become a Contractor who also holds these high standards of quality, customer service, and expert craftsmanship, we welcome you!