California Contractor License Bond

Orange button to instantly purchase a California Contractor License Bond. The blue state of California on each side and an under construction sign.

 

A California Contractor License Bond is required by all contractors doing business in the state. Learn more about what these license bonds guarantee, what they cost and how to get one.

 

 

Who Needs a California Contractor License Bond?

In California, the Contractors State License Board (CSLB) requires that a 

“Contractor’s Bond must be in place before CSLB can issue an active license, reactivate an inactive license, or renew an active license. (Business and Professions Code Section 7071.6).”

How Do You Get a California Contractor License Bond?

Most contractors can obtain a California Contractor License Bond online in just minutes by simply filling out a form, paying the bond premium and printing their bond. 

 

Instantly purchase a $25,000 California Contractor License Bond Green Button

 

Better pricing may be available for contractors willing to submit more information.

What is the Amount of The California Contractor License Bond?

Beginning January 1, 2023, California Bill 607 changed the required amount of the California Contractor License Bond to $25,000. The amount had previously been $15,000. Contractors that previously had a $15,000 contractor license bond in place will need to contact the surety bond company and increase their bond amount. 

 

This shows the changes of the California Contractor License Bond from to $25,000 from $15,000. On each side is an image representing the state of California.

 

Exceptions to the Bond Amount

The board may double the amount of the bond required for the following reason under code section 7071.6:

  • The applicant has either been convicted of a violation of Section 7028 or has been cited pursuant to Section 7028.7.
  • If the applicant has been cited pursuant to Section 7028.7, the citation has been reduced to a final order of the registrar.
  • The violation of Section 7028, or the basis for the citation issued pursuant to Section 7028.7, constituted a substantial injury to the public.

What Does a California Contractor License Bond Cost?

The cost depends on the credit of the contractor. Many contractors using the online instant issue program can expect to pay about $220 annually. Contractors willing to provide more information may qualify for better pricing. Tier 1 pricing for contractors with excellent credit can get the $25,000 California Contractor License Bond for as little as $90 for one year. Bond premium for these license bonds is due annually as long as the bond is active.

Some surety bond companies provide contractors with discounts for purchasing multiple years in advance. These discounts can range from 20% – 40% depending on the surety bond company and the number of years purchased. For example, there is one surety bond company offering California Contractor License Bonds for $225 if a 3-year bond is purchased.

Usually if the license bond is canceled, the surety will refund the unearned portion of the bond premium.

What Information is Needed to Obtain a California Contractor License Bond?

A contractor only needs a few items to quickly obtain a bond online. These include:

  • The Business Name
  • The Business Address
  • The Contractor’s Name
  • The Contractor’s Address
  • The Contractor’s License Number
  • The Contractor’s Phone Number

Can a Contractor with Bad Credit Get a California Contractor License Bond?

Almost every contractor can get a license bond regardless of credit. A contractor with bad credit or bankruptcies may have to provide additional information and/or pay a higher rate but can still get a bond in most cases.

What Does a California Contractor License Bond Guarantee?

The bond is filed for the benefit of consumers who may be damaged as a result of defective construction or other license law violations, and for the benefit of employees who have not been paid wages that are due to them. Specifically, the California Contractor License Bond protects the following parties under California code 7071.5:

  1. A homeowner contracting for home improvement upon the homeowner’s personal family residence damaged as a result of a violation of this chapter by the licensee.
  2. A property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of this chapter by the licensee. That property owner shall only recover under this subdivision if the single-family dwelling is not intended for sale or offered for sale at the time the damages were incurred.
  3. A person damaged as a result of a willful and deliberate violation of this chapter by the licensee, or by the fraud of the licensee in the execution or performance of a construction contract.
  4. An employee of the licensee damaged by the licensee’s failure to pay wages.
  5. A person or entity, including a laborer described in subdivision (b) of Section 8024 of the Civil Code, to which a portion of the compensation of an employee of a licensee is paid by agreement with that employee or the collective bargaining agent of that employee, damaged as the result of the licensee’s failure to pay fringe benefits for its employees, including, but not limited to, employer payments described in Section 1773.1 of the Labor Code and regulations thereunder (without regard to whether the work was performed on a private or public work). Damage to a person or entity under this subdivision is limited to actual employer payments required to be made on behalf of employees of the licensee, as part of the overall compensation of those employees, which the licensee fails to pay.

This chart shows the parties who are protected by a California Contractor License Bond. The background is a picture of a California beach.

Claims Against a California Contractor License Bond

All claims except fringe benefit claims must be brought against the California Contractor License Bond within 2 years from the date which the claim occurred, or within 2 years of the contractor’s license being suspended or revoked. The date starts at whichever event occurred first.

For claims involving fringe benefits, a claim must be brought within 6 months of the fringe benefit delinquency being discovered, and a civil action must be brought in court within 2 years of the date the fringe benefits were due.

This chart show the length of time each party has to make a claim against a California Contractor License Bond. The background is a picture of California palm trees at sunset.

Who Are the Parties to a California Contractor License Bond?

 

The licensed contractor is the principal on the contractor license bond. This party is responsible for meeting following the license regulations. The obligee is the State of California. This is the party benefiting from the bond on behalf of the public. The Surety is the bond company who is guaranteeing the Contractor’s obligation. If a valid claim is filed against the contractor, the surety may be liable for paying the claim.

The three-party nature separates the surety bond from an insurance policy which only has three parties.

 

Parties to a Californa Contractor License Bond - This chart shows the three party relationship between the California Contractor, the state of California and the Surety. The background is a California sunset and a sign that says, "Welcome to California"

 

Newly Licensed Contractors

A California Contractor License Bond is required for Newly licensed contractors. Fortunately, even new contractors can obtain a bond by clicking here.

Requirements of the Bond

The State of California requires that a contractor license bond have the following:

  • The bond must be written by a surety company licensed through the California Department of Insurance. You can do a search for the surety companies here.
  • The business name and license number on the bond must correspond exactly with the business name and license number on the CSLB’s records.
  • The bond must have the signature of the attorney-in-fact for the surety company.
  • The bond must be written on a form approved by the Attorney General’s Office.
  • The bond must be received at the CSLB’s Headquarters Office within 90 days of the effective date of the bond.

 

Unfortunately, fraudulent bonds do exist. It’s important to make sure the contractor bond meets these requirements to avoid having to get another bond and possibly pay another premium.

Alternatives to a California Contractor License Bond

The only alternative that is acceptable is a Cashier’s Check or Bank Certified Check. The CSLB will no longer accept any other financial instruments effective January 1, 2019, by Assembly Bill 3126

Requirements for the Cashier’s Check as a Bond Alternative 

  • The check must be in the amount of $25,000 for the contractor’s bond and $25,00 for the bond of qualifying Individual. For a disciplinary bond, the check must be in the amount determined by the Registrar.
  • The check must state: “Payable to the Contractors State License Board.”
  • The check must list the license number and exact business name as reflected in CSLB’s records.
  • A check filed in place of a Bond of Qualifying Individual must list the qualifier’s name.

California contractors may want to reconsider posting a Cashier’s Check though. First of all, it ties up cash that could be used in other places. 

Secondly, if a claim does occur, the funds will be taken immediately with little defense. Alternatively, a claim against a surety bond required a trained surety person to investigate the claim. Learn more about surety versus cash.

Duration and Cancellation

A California Contractor License Bond must be continuous in nature. A bond must be in place as long as the contractor is licensed in the state. If the bond is cancelled for any reason, the contractor will need to file a new bond with the state of risk having their license suspended.

California Contractor License Bonds Require Indemnity 

Like all surety bonds, California Contractors License Bonds do require indemnity. That means that if the surety pays a valid loss, they will seek to be reimbursed by the contractor. Contractors can read more about indemnity.

California Contractor Disciplinary Bond

Button for Califiorna Disciplinary Bond Instant Purchase

Contractors who have had their license suspended or revoked, will also need to obtain a Disciplinary Bond and file it with the Registrar before they can have their license reinstated.

The Disciplinary Bond is in addition to other bonds such as the Contractor License Bond.

The Registrar will determine the amount of the Disciplinary Bond. It depends on the seriousness and reason for the suspension. It must be more than the $25,000 for a Contractor License Bond but not more than ten times the amount or $150,000. The Disciplinary Bond must be on file for two years, but the Registrar may require longer. The company must also remain licensed during the disciplinary bond period.

Additional requirements of the California Contractor Disciplinary Bond are:

  • The bond must be written by a surety company licensed through the California Department of Insurance.
  • The business name and license number on the bond must correspond exactly with the business name and license number on the CSLB’s records.
  • The bond must have the signature of the attorney-in-fact for the surety company.
  • The bond must be written on a form approved by the Attorney General’s Office.
  • The bond must be received at the CSLB’s Headquarters Office within 90 days of the effective date of the bond.

Bond of a Qualifying Individual

Many California Contractors will also need a Bond of a Qualifying Individual. Bill 607 also changes the amount of a California Bond of a Qualifying Individual to $25,000. These bonds were previously required to be in the amount of $12,500 and will also need to be increased for those with an existing bond in place. They can be purchased below.

Button to Instantly Purchase a California Bond of a Qualifying Individual

Verifying the Bond

Unfortunately, fraud exists in surety bonding. It is always a good idea to verify that the California Contractor License Bond you received is legitimate. You can read more about how to verify a surety bond and what to look for here.

Summary

California Contractor License Bonds are required for all contractors operating in California. These license bonds are easy to get and inexpensive. California contractors may also need Contract Bonds such as Performance Bonds, Payment Bonds and Bid Bonds. The surety bond experts at Axcess can help contractors with all their questions on surety. Contact us anytime.

Vice President at Axcess Surety
Vice President of Axcess Surety. Surety Bond and financial expert dedicated to helping contractors, businesses and individuals understand and obtain surety bond credit.
Josh Carson, AFSB
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