What is a New York Contractor License Bond?
Many counties, cities, towns, and other municipalities in the state of New York require a license surety bond before a contractor can obtain a license or a permit bond for a specific project.
A surety bond, referred to as a contractor bond, is a type of insurance contract required by a licensing or building authority before a license or permit can be issued for construction projects can begin. This contractor bond is a a financial guarantee that you'll follow all relevant building codes and regulations, plus follow through on your contracting obligations to your customers and subcontractors.
By purchasing a contractor surety bond, you're making this promise to the building authority and to your customers.
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Who Is Required To Purchase a New York Contractor Bond?
The state of New York does not have a statewide contractor license bond. A bonding requirement is the responsibility of the county or city.
The most common contractor bonds we encounter in New York are the:
- New York City home improvement license bond
- Putnam county contractor license bond
- Westchester plumber license bond
- Village of Flower Hill permit bond
- Village of Port Jefferson permit bond
A contractor license bond is very similar to a permit bond.
A license bond is required typically on a one year term and applies to every contracting job in the county or city requiring the bond.
A permit bond is required on a per job basis. You will find out about these bonding requirements when you go pull permits for any given construction project.
Why is a New York Contractor Bond Required?
All contractor and construction surety bonds serve a similar purpose of:
- Ensuring contractors follow local rules, building regulations, and laws
- Protecting customers from purposeful misconduct of fraud by a contractor
It's the job of county and city building authorities to protect the public and ensure contractors who perform work for the public are qualified with enough experience to follow through on contracts.
A standard practice in the contracting industry is to require contractor surety bonds for the protection of the public who hires these contractors.
What Does a New York Contractor Bond Protect Against?
While local building authorities do their best to ensure contractors who receive licenses and permits are qualified, this is not always the case.
Unfortunately, there will always be a small number of contractors who purposefully make decisions to increase profits that financially harm their customers.
These fraudulent actions of misconduct include:
- Breaking the terms of a construction project
- Partially completing or abandoning projects
- 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
- Failing to follow local laws that cause a customer to get in trouble
- Altering contracts or overcharging for changes
If a contractor is found guilty of any of these actions, a claim can be made against the contractor bond for financial repayment.
The amount of protection is equal to the amount of the required bond.
The New York Contractor Bond Amounts
The contractor bond amount you will be required to purchase will be told to you when:
- You go through the local licensing process
- You apply for the required permits on a specific project
Here are the bond amounts for some of the more common contractor bonds we sell:
| Bond Type | Bond Amount |
|---|---|
| New York City Home Improvement Bond | $20,000 |
| General Contractor Putnam County | $25,000 |
| Contractor License/Permit Village of Flower Hill | $25,000 |
| Contractor License Bond Town of North Hempstead | $10,000 |
| Plumbing Contractor Westchester County | $10,000 |
Remember, this bond amount is the maximum coverage available to customers and subcontractors of a contractor in the event they fall victim to purposeful misconduct or fraud by the contractor.
How Much Does a New York Contractor Cost?
The price of a New York contractor bond varies based on the:
- Type of bond required
- Bond amount
- Rate quoted from the surety
A surety is an insurance company that underwrites surety bonds. And like any insurance company, the rates they charge are based on their own internal assessment, typically taking into consideration these factors:
- Personal credit
- Contracting experience and industry experience
- Any prior bond claims if you've been licensed or obtained permits in the past
The rate quoted by a surety multiplied by the bond amount you need is the price you'll pay.
The rates each surety quotes will vary as will the final price.
And because rates vary, the final prices can vary too. Specialized surety agencies like Surety Bonds Direct help customers save close to a hundred dollars purchasing a contractor bond.
We use our network of A rated sureties to price shop for you and find you the lowest possible price.
New York City Home Improvement Contractor License Bond
Here are some example pricing for the $20,000 home improvement contractor bond. The rates in the table are from really good to average.
| Bond Amount | Surety Bond Rate | Price You Pay |
|---|---|---|
| $20,000 | 0.5% | $100 |
| $20,000 | 1% | $200 |
| $20,000 | 2% | $400 |
| $20,000 | 3% | $600 |
Putnam County Home Improvement Contractor License Bond
Similar to the New York City home improvement license, here are example prices for the $25,000 home improvement license bond in Putnam county.
| Bond Amount | Surety Bond Rate | Price You Pay |
|---|---|---|
| $25,000 | 0.5% | $125 |
| $25,000 | 1% | $250 |
| $25,000 | 2% | $500 |
| $25,000 | 3% | $750 |
Other local contractor bonds will follow a similar pricing structure.
When you work with Surety Bonds Direct, we will use our network of A-rated sureties and price shops for you to find the lowest price.
When you receive pricing, you're under no obligation to purchase.
It's always worth getting pricing because we've helped New York contractors save enough money so they can take their savings and spend it on:
- Application fees
- Liability insurance costs
- Examination fees
- Fingerprint and background check fees
Discover your exact pricing today by filling out our free quote form or call a bond specialist at 1-800-608-9950 to start the quote process.
For most New York contractor bonds, it takes less than one business day to obtain pricing.
Request a FREE Price Quote Today
Let us price shop for you and find the lowest possible price. This costs you nothing and there's no obligation to buy once you get pricing.
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Talk to a bond specialist today. They will help you find the contractor bond you need and get you the lowest possible price. 1-800-608-9950
What Happens After You Purchase Your Bond?
After you purchase your bond, Surety Bonds Direct's issuing department will prepare your bond with the correct signatures, seals, and the required power of attorney so your bond is accepted.
Most New York contractors bonds can be emailed to you. This makes it easy for you to submit the bond directly to the agency requiring it.
Renewing Your Contractor Bond
License bonds typically expire on a yearly basis at which time they need to be renewed.
Renewing a contractor bond is as easy as paying the renewal premium.
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.
Permit bonds typically remain active for the life of the project. If a project takes longer than a year to complete, you may have to renew a permit bond.
If this is the case, the process is the same as renewing a license bond.
Most 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 a new bond back to the Board.
If we find you lower pricing during bond renewal, we'll secure you the lower priced bond. In this case you will have to submit the bond to the Board so they know you're still actively bonded.
Contractor Bonds And Getting Your New York Business License/Registration
Because contractor bonds in the state of New York are so localized, it's hard to outline the license and permit process for each scenario.
We do have a post outlining the steps to get your New York City home improvement contractor license. This is one of the most common (and frequent) licenses obtained by New York contractors.
At a high level the steps are:
- Complete the business license application
- Obtain your sales tax identification number or application confirmation number
- Show proof of your business address
- Show proof of home address
- Provide proof of workers compensation insurance (if applicable)
- Provide proof of EPA certification or a signed affirmation
- Decide to purchase a surety bond or participate in the city's Trust Fund program
- Sign the contractual compliance agreement
- Pass the license exam
- Get your fingerprints and background check
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