Utah Contractor License Bonds

Get Your Utah Contractor Bond

Who Is Required To Purchase a Utah Contractor Contractor Bond

Just to recap, here's a full list of the Utah contractor classifications:

• General Engineering
• General Building
• Modular Unit Installation
• Residential and Small Commercial
• Residential and Small Commercial - Non Structural Remodeling and Repair
• Factory Built Housing
• General Electrical
• Residential Electrical
• Solar Photovoltaic
• General Plumber
• Residential Plumber
• Carpentry and Flooring
• Masonry, Siding, Stucco, Glass, and Rain Gutter
• Asphalt and Concrete
• Drywall, Paint, and Plastering
• Roofing
• Foundation, Excavation, and Demolition
• Landscape and Recreation
• HVAC
• Radon Mitigation
• Fire Suppression Systems
• Boiler, Pipeline, Waste Water, and Water Conditioner
• Sign Installation
• Elevator
• Limited Scope License

Any licensed contractor can be required to purchase a contractor license surety bond.

The Financial Standing

During the application process, if you, an owner, a qualifier, officer, manager, etc... have had any past:

• Judgements
• Liens
• Tax liens
• Child support
• Outstanding debts
• Bankruptcies

You must disclose and provide paperwork applicable to each debt or bankruptcy.

Based on these figures and your business structure, there are different bonding requirements.

Unincorporated Business Structures

If you are an unincorporated entity, any business structure like a partnership or LLC that flows profits directly to the owners, your bond amount is:

20% of the annual gross distributions from the business entity to its owners including:

• Coverage for unpaid obligations for work performed
• Unpaid income taxes and self employment taxes on the gross distributions

Other Situations

If you're not an unincorporated business structure and you're required to purchase a bond, the amount will be the great of:

Bankruptcy Scenario

If a bankruptcy has been filed within the last 3 years from the date of the application or the renewal, the amount is 30% of the total liabilities filed with the bankruptcy court.

Other Outstanding Debts

Or if the cumulative outstanding debts are more than $1,000 the bond amounts are as follows:

• 30% of total outstanding debt
• $50,000 for any general contractor classification except R100 Residential and Small Commercial Contractor
• $25,000 for R100 classification
• $15,000 for all other classifications

This can be confusing but keep in mind the Utah Division of Professional Licensing will tell you the bond amount.

But understanding how they came to that amount is good to know.

Why is a Utah Contractor Bond Required?

The Utah Division of Professional Licensing requires contractors and contracting businesses to get licensed and conduct their business according to the rules, regulations, and laws in the state.

This license 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

And one of the requirements is the net-worth (financial standing) requirement.

Based on the financial standing and debt limits of the contractor, the Division will determine if the contractor should purchase a surety bond.

Every year the Division conducts assessments of all complaints against contractors and they've found, contractors with higher levels of debt are more likely to purposefully harm their customers to increase profits.

This surety bond or contractor license bond will provide the appropriate protection to the customers of the licensed contractor.

What Does a Utah Contractor License Bond Protect Against?

Every year, there's always a handful of licensed contractors who try to purposefully cut corners to increase profits or even steal money.

Examples of these fraudulent actions include:

• Breaking the terms of a construction project
• 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 bond amount.

Once a contractor has little to no debt, the Division finds the contractor is not only less likely to commit fraudulent actions, but in the case of any disagreement, they can work it out with their customer.

How Much Does a Utah Contractor Bond Cost?

The cost of the Utah contractor license bond is based on a rate quoted by a surety.

A surety is an insurance company that chooses to underwrite surety bonds. Every surety will conduct their own independent assessment of an applicant using factors such as:

• Primarily personal credit of the owner or owners
• Contracting experience and industry experience
• Any prior bond claims if you've been licensed in the past

And this is why using a specialized surety agency like Surety Bonds Direct is such a good idea.

We use our network of A rated sureties to price shop for you, collect the various rates, and find you the lowest possible price for your bond.

Here's a table showing you examples of pricing for $50,000 contractor bond. Remember the bond amount will likely be different for you.

Notice how a half a percent to a full percent can make a big difference in the price you pay.

But it's important to get your specific pricing and the process is 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.

County, City, or Local Government License Bonds

There are a few city level bonding requirements. Most of these will be permit or right of way bonds. A right of way bond is required when a project interferes with public city property like:

• Public roadways
• Public sidewalks
• City sewer systems

Right of way bonds are only required for the length of the project.

For any local requirement, you can instantly purchase your bond, for bond amounts up to $25,000.

Once you have the bond amount given to you by the county or city agency requiring the bond, the minimum price starts at $100.

The price is 1% of the bond amount.

Surety Bonds Directly allows you to enter your bond amount and instantly purchase your bond. After you purchase, the bond will be issued within 1 to 2 business days.

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, notarized seals, and the required power of attorney.

Utah requires the original bond with raised seals.

This means we will have to mail you the bond. Please allow 5 to 7 days to receive your bond through mail. This is a good reason to not push off purchasing your bond to the last second. You don't want to delay submitting your application because you're waiting for the mail.

When you get your bond amount and agree to pricing, get this bond process completed.

Renewing Your Contractor Bond

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

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.

Eventually, when you improve your financial standing, during the renewal process, the Division will waive the bonding requirement. Any active bond you have can expire on it's own.

This 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 Division.

The only time you'll have to resubmit a new bond with the Division is if we find you lower pricing during the renewal process. New pricing means a new bond will have to be issued.

Contractor Bonds And Getting Your Utah Business License/Registration

If you're applying for your first Utah contractor's license, a high level outline of the process is below.

We have post breaking down the Utah contractor license process. Make sure you give that a read.

At a high level the steps are:

1. Fulfill the contracting experience requirements
2. Complete any pre-licensing education
3. Show proof of insurance policies
4. Meet the financial net-worth or surety bond requirement
5. Submit your completed application