California Contractor License Bonds

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Who Is Required To Purchase a California Contractor Contractor Bond

California has dozens of contractor classifications fitting into four main categories:

• General Engineering Contractors
• General Building Contractors
• Residential Remodeling Contractors
• Specialty Contractors

All newly licensed contractors are required to purchase a contractor bond per license classification.

This means if you get licensed as a General contractor and you obtain two additional speciality licenses, each license requires it's own bond. Each license's requirements are independent of each other.

Additional Bonding Requirements

Beyond the contractor license bond and individual construction project bonds, California has a few additional surety bonds that may apply to you.

LLC Worker Bond

If you're a licensed LLC business entity, you're required to purchase an LLC worker bond. This bond acts as a guarantee that you will pay your employees fairly for wages and any fringe benefits.

Qualifying Individual Bond

A qualifying individual bond is required for Responsible Managing Officers (RMO) and Responsible Managing Employees (RME). A qualifying individual is the person responsible for meeting the licensing requirements like:

• Education requirements
• Exam requirements

A Responsible Managing Officer (RMO) is an owner of the licensed business entity and the individual designated as the qualifying individual.

A RMO is required to purchase a bond for qualifying individual if they own less than 10% of the business.

All RMEs for a business entity are required to purchase a qualifying individual bond because employees have no ownership interest.

Disciplinary Bond

A disciplinary bond is required by contractors who have had a previous license revoked. This bond allows the contractor to reinstate their license and it must be kept active for at least two years. This timeframe can be longer at the discretion of the CSLB.

Why is a California Contractor Bond Required?

California (like all states) requires individuals who want to offer professional contracting services to be licensed through the CSLB.

The licensing process ensures each contractors has:

• A minimum level of experience
• Obtained the necessary level of education
• The proper business records are submitted
• Selected the appropriate license type for the projects they want to bid on

Part of the licensing process is the bonding requirement (or requirements).

Obtaining a contractor license and license bond gives the California public confidence that you are a contracting expert they can trust to hire and get a project completed.

There are many other types of surety bonds a bonded contractor will have to purchase over their career.

What Does a California Contractor License Bond Protect Against?

Every year the CSLB assesses all public complaints against contractors. The number and severity of these complaints dictate the bonding requirement.

It's unfortunate, but every year there will be licensed contractors who try to purposefully cut corners to increase profits at their customers' expense.

These fraudulent actions of misconduct include:

• Breaking the terms of a construction project
• Altering contract terms without the customers knowledge
• Taking deposits or down payments and never starting or completing a project
• Replacing agreed upon materials with cheaper alternatives to increase profits
• Failing to pay subcontractors for completed work
• Neglecting building codes and purposefully performing poor quality work

If a contractor is found guilty of any of these actions, a claim can be made against the contractor license bond for financial repayment, but only up to the ($25,000) bond amount.

The other bonds serve a similar function:

• Again the LLC Worker bond makes sure the licensed LLC pays their employees fairly
• The Qualifying Individual bond ensures the QA manages projects according to the contract since their ownership stake makes it easier for them to be influenced into poor decision making
• The Disciplinary Bond ensures the contractor will follow all the rules of being license and not make similar decisions that got their license revoked in the first place

How Much Does a California Contractor Bond Cost?

The CSLB has set the contractor license bond amount to $25,000.

The price to purchase this bond is based on a rate quoted by a surety.

A surety is an insurance company that underwrites the surety bond. Each surety will perform their own assessment and determine a rate typically using these factors:

• The personal credit of the owner or owners
• Contracting experience and industry experience
• Any prior bond claims if you've been licensed in the past
• The current state of complaints against contractors as a whole

Because each surety will quote a rate based on their internal assessment, the final prices of the bond will be different.

Specialized surety agencies like Surety Bonds Direct help customers save hundreds of dollars purchasing a California contractor license bond.

We use our network of A rated sureties and act as your personal surety bond shopper. Our bond specialists will collect rates for each surety, and find you the lowest possible price for your bond.

Here's a table showing you examples of pricing for $25,000 contractor bond.

It's Important To Get Your Unique Pricing

It's important to get your specific pricing so you can complete the application process and it's easy to start.

Click here and start the online quote process. It takes 90 seconds to submit your request and we'll start pricing shopping for you.

If you prefer to speak with a bond specialist, you can call 1-800-608-9950.

Having a bond specialist secure pricing for you costs nothing and there's zero obligation to purchase the bond once you receive the pricing.

Additional Bonding Requirements

The process for the additional bonding requirements is the same as each bond requires a personalized quote to determine the price.

Your bond specialist will work with our network of A-rated sureties and work to find you the lowest possible price.

Once you agree to your price, purchasing your bond is as easy completing an online order form.

What Happens After You Purchase Your Bond?

After you purchase your bond, Surety Bonds Direct's issuing team will prepare your bond with the correct signatures, notarized seals, and the required power of attorney.

Having worked with so many California contractors, we've decided to make the process easier for you and file your bond for you. Other than completing your purchase, there's nothing additional for you to do.

If you want or need a copy of your bond, we can email or mail you a copy for your records.

Renewing Your Contractor Bond

California contractor license bonds expire one year from the active (effective) date of your bond.

The effective date is determined by you when you purchase the bond.

As your expiration date approaches, your bond specialist will reach out to you 30 to 45 days in advance of your renewal date to make paying the renewal premium easy.

Once you pay the renewal premium, your bond remains active.

The California Contractor License Bond is Continuous

A continuous bond means the original bond remains active as long as you pay the renewal premium.

Most of the time, you never have to worry about having a new bond issued or submitting the bond to the CSLB.

If we find you lower pricing, we'll get you that bond, file it for you, and of course notify you of the bond change.

Contractor Bonds And Getting Your California Business License/Registration

Read our post on getting your California contractors license if this is your first time getting licensed. The process is straightforward.

At a high level the steps are:

1. Determine who will hold the license
2. Outline business management
3. Decide on license classification and specialty
4. Meet the financial net-worth or surety bond requirement
5. Complete necessary background forms
6. Complete necessary education and experience requirements
7. Submit your completed application

Detailed licensing information for various contractor classes can be found at the Contractors State Licensing Board website. The following is a guide with helpful advice, tips and information from the California Contractors License Board and Surety Bonds Direct on maintaining your Contractor's Bond.

• If a license is renewed, you must comply with the bond requirements.
• A bond must be written by a surety company licensed through the California Department of Insurance. As a licensed insurance agency in California, Surety Bonds Direct (License# 0K22139) only works with insurance carriers meeting these criteria.
• The bond must be received at the CSLB headquarter's office within 90 days of the effective date.
• The bond remains in effect until the CSLB receives a notice from the surety company cancelling the bond.
• Only one bond can be in effect at a time. A second bond filed for the same period cancels out the first bond.
• A bond cannot be transferred from one license to another or from one qualifying individual to another.
• Effective date of a new bond should be the same as the cancellation date of the expiring bond.
• If a license has more than one Responsible Managing Employee or Responsible Managing Officer, each qualifier must comply with the qualifier bond requirements.
• The CSLB cannot return any bond that has been accepted for an active license.
• Failure to maintain continuous bond coverage will result in the license being suspended. Any work performed while the license is suspended is considered to be unlicensed and disciplinary action can be taken against you.