California Contractor License Bond

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.

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)."

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.

A California Contractor License Bond is a three-party agreement between a principal, obligee and surety. The principal on the bond is the licensed California Contractor. The principal is the party responsible for upholding the bond conditions. The principal agrees to comply with all laws and codes applying to their license and construction in California and the payment of wages and benefits to certain employees and other parties. The obligee is the California Contractor Licensing Board (CLSB). The obligee receives the benefit of the bond. The surety is the third-party bond company. In exchange for payment and indemnity of the principal, the surety provides a financial guarantee to the obligee on behalf of the principal. Should the principal violate any codes or laws, a customer can file a claim against the 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. 

Even contractors with credit challenges can generally obtain California Contractor License Bonds. Axcess Surety has bond companies and solutions for contractors with even the most challenging credit situations. While additional information may be needed and the cost may be higher, we can usually help contractor get these license bonds.

Yes. Even newly licensed contractors can obtain a contractor license bond online at Axcess Surety.  Make sure you have your application or approval number when submitting your online application.

The cost depends on the credit of the contractor. Tier 1 pricing for contractors with excellent credit can get the $25,000 California Contractor License Bond for as little as $150 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, a 3-year bond at a preferred rate can be purchased for $375. A sample of rates can be found on the table.

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 approved surety companies.
• 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.

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.