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California Contractor License Bond

June 4, 2022

A California Contractor License Bond is required by all contractors doing business in the state. Learn more about what these 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 California Contractor License Bond for $15,000 green button

 

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

What is the Amount of The California Contractor License Bond?

 

The CSLB requires that all contractors obtain a bond in the amount of $15,000. 

 

Article 5 of the California Codes states, 

 

"7071.6.  

(a) The board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee file or have on file a contractor’s bond in the sum of fifteen thousand dollars ($15,000)"

 

Exceptions to the Bond Amount

 

Suspension and Citations 

 

The board may double the amount of the bond required if the contractor has been suspended or cited under section 7028 (operating without a license)

 

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 $132 annually. Contractors willing to provide more information may qualify for better pricing.

 

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 amount of years 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.

 

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 $15,000 for the contractor's bond and $12,500 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 perso. To investigate the claim.

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 here.

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 $15,000 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. These bonds are required to be in the amount of $12,500. They can be purchased below.

Button to Instantly Purchase a California Bond of a Qualifying Individual

 

California Contractor License Bonds are required for all contractors operating in California. These bonds are easy to get and inexpensive so there is no reason not to have one. 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.

Other Frequently Asked Questions:

How Does a California Contractor Bond Work?

The contractor obtains a $15,000 bond from a surety. The bond provides protection to the public if the contractor breaks California Construction Code or laws.

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