Utah requires contractors to be licensed and to obtain a Utah Contractor License Bond. These bonds can be purchased by contractors online. Learn more about what these bonds guarantee, what they cost and how to obtain one.
A Utah Contractor License Bond is a surety bond required by the state in order for a contractor to obtain licensing. The bond guarantees that a licensed Utah contractor will indemnify persons, firms and corporations for losses that occur as a result of the contractor’s failure to comply with any provision of the Utah Code Title 58 Chapter 1 and 55. This includes the failure to pay taxes.
The Utah licensed contractor is referred to as the Principal on the bond. The principal is responsible for complying with all codes and laws pertaining to Utah construction to the Obligee. The Division of Occupational and Professional Licensing is referred to as the Obligee on the bond. The obligee receives the benefit of the license bond on behalf of the public. The Surety Bond company is the third-party providing the bond. The surety is providing a financial guarantee on behalf of the principal. In return for payment and indemnity, the surety provides a promise to cover the principal’s damages if they occur.
Should a claim occur, a person, company, or the state can file a claim against the bond. The surety company will investigate the claim and pay it if necessary. Should the surety make a claim, they may seek reimbursement from the principal under the indemnity agreement. The license bond provides a valuable service to the general public. Instead of seeking damages from the contractor through legal means, a party can get paid directly from a licensed surety bond company.
To fulfill the financial security requirements of Utah Code 58-55-306, a Utah Contractor License Bond is required to be in the amount of $50,000 currently. This is the most that the bond company is required to pay out under the bond regardless of the number of claims filed, the dollar amount of the claims, or the number of years the surety has written the bond for the contractor. This is referred to as the bond’s “penal sum”. Payment under the bond does not generally relieve the contractor of additional damages and the bond’s sum may not be enough to cover all damages.
Utah Contractor License Bonds can be purchased instantly online in minutes. Approval requires a simple credit check of the company owners. The contractor will need to complete a few simple questions, submit to a credit check and then pay for and print their license bond.
In most cases, even contractors with credit challenges can obtain license bonds. Axcess Surety works with many different surety bond companies to help contractors of all backgrounds. Our dedicated surety experts can help contractors in almost any situation.
A Utah Contractor License Bond Costs 2% per year for most contractors. This means that the \$50,000 license bond will cost most contractors \$1,000 per year. Some surety bond companies will provide discounts to contractors willing to purchase multiple years in advance. Contact the experts at Axcess Surety for more options. Keep in mind that in most cases, the bond must remain in effect during the contractor entire license period and the surety bond premium will also be due at each renewal.
As an alternative to providing a license bond, a Utah contractor may complete and sign a financial questionnaire prepared by the division. If choosing this option, the contractor must show that they have the financial qualifications for licensing. The state may audit the information at any time to make sure the contractor maintains such financial qualifications.
Utah Contractors wishing to do commercial work may also need other bonds such as bid bonds, performance bonds and payment bonds. The requirements for obtaining such bonds are different from obtaining contractor license bonds. Contractors performing commercial work will often need both license bonds and contract bonds.
Utah Contractor License Bonds are required in many cases in order to obtain licensing. These bonds can be purchased online instantly at Axcess Surety. Contact our surety experts to learn more about these and all other surety bonds. Contractors can also view our Complete Guide Page to learn more about surety bonds including many frequently asked questions.
Axcess Surety is the premier provider of surety bonds nationally. We work individuals and businesses across the country to provide the best surety bond programs at the best price.
