Georgia Contractor License Bond $25,000

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In Georgia, General Contractors and Residential Contractors need to be licensed and provide Georgia Contractor License Bonds or meet certain financial requirements. Learn more about these license bonds. 

 

What is a Georgia General Contractor License Bond?

 

A Georgia Contractor License bond is a type of surety bond that guarantees that a contractor will comply with the terms of Georgia Code 43-41-1. The bond specifically guarantees that the bonded contractor and/or an agent acting on their behalf will comply with the conditions of any written contractor or warranty made in the connection with the sale or exchange of any structure built. It also guarantees that these parties will pay any losses, damages, or expenses sustained by purchases and vendees that have been sustained by fraud or misrepresentation of title or liens against a structure.

 

Georgia code specifically states that construction is a profession of public interest, and any violation of the code will be liberally applied against contractors.  

 

How Does a Georgia General or Residential Contractor License Bond Work?

 

A Georgia Contractor License Bond is a three party agreement between a contractor, a surety bond company, and the State of Georgia. The licensed contractor purchases the bond from a surety bond company. The contractor provides indemnity and bond premium to the surety bond company in exchange for writing the bond. The surety bond company provides a third-party promise to the State of Georgia that the contractor will uphold the codes of the state. If the contractor does not, a claim can be made against the bond and the surety bond company will have to pay. If the surety bond company pays a claim, they will seek to be indemnified by the contractor under the indemnity agreement. Contractors can read more about indemnity here.

 

What is the Required Amount of a Georgia Contractor License Bond?

 

Georgia requires Residential Basic Contractors and Residential Light Commercial Contractors to post a Georgia Contractor License Bond in the amount of twenty-five thousand dollars ($25,000).

 

What Does a Georgia Contractor License Bond Cost?

A Georgia Contractor License Bond costs between 0.5% – 1.0% of the bond amount for most contractors. Contractors willing to provide financial information often qualify for the best rates. Additionally, many surety bond companies will provide discounts of up to 20% for contractors who purchase multiple years upfront. The bond premium will be due each year that the contractor keeps the contractor license bond in place.

 

How to Obtain a Georgia Contractor License Bond

 

Georgia Contractor License Bonds for $25,000 can be purchased instantly online by entering the contractors’ information. There is no credit check required and these bonds can be easily purchased by any contractors. Even contractors with bankruptcies or bad credit can obtain these bonds as no credit check is required. 

Orange and blue instant purchase button for a Georgia Residential or General Contractor License Bond. A blue state of Georgia on the left and a blue contractor on the right.

Alternatives to a Georgia Contractor License Bond

 

Georgia will also allow contractors to provide alternative means to prove financial responsibility. These include a letter of credit or a line of credit letter and a bank reference form for Residential Basic contractors only

 

Georgia Commercial Code Title 11 Section 5 defines a Letter of Credit as: 

 

A definite undertaking that satisfies the requirements of Code Section 11-5-104 by an issuer to a beneficiary at the request of or for the account of an applicant or, in the case of a financial institution, to itself or for its own account, to honor a documentary presentation by payment or delivery of an item of value.”

 

For Residential Basic Contractors that can qualify, a bank reference may be the cheapest way to satisfy the financial responsibility requirements. However, contractors may want to reconsider using a letter of credit in place of a surety bond. First, the cost may be significantly more. Secondly, it may tie up a contractor’s borrowing ability that they need for their business. Read more about the differences between surety bonds and letters of credit here

 

Who Needs a Georgia General or Residential Contractor License Bond?

 

Residential Contractors and Residential Light Commercial Contractors may choose to purchase a Georgia Contractor License Bond to fulfill their financial responsibility requirements. Georgia General Contractors and General Contractors Limited Tier also have financial requirements, but the state does not allow for those to be fulfilled by a surety bond at this time. See the full financial and Insurance requirements for each license below.

Financial Requirements for Georgia Contractors License

 

The following are the State of Georgia’s financial responsibility and insurance requirements for General Contractors. 

 

Residential Basic Contractor

 

This chart shows the definition, financial and insurance requirements for a Georgia Residential Basic Contractor License. The background is a picture of construction blueprints with Georgia peaches at the bottom.

 

A Georgia Residential Basic Contractor means:

 

“ A person who performs contractor work or activity relative to detached one-family and two-family residences and one-family townhouses not over three stories in height and their accessory buildings and structures.”

 

There are no financial limits to any contract for a Residential Basic license. 

Financial Responsibility Requirements

 

A Residential Basic Contractor must prove financial responsibility through one of the following: 

 

  • A $25,000 surety bond
  • A $25,000 letter of credit
  • A $25,000 line of credit letter
  • A bank credit reference form
  • Proof of $25,000 net worth

 

Insurance Requirements

 

  • Proof of general liability insurance in a minimum amount

of $300,000.00 per occurrence.

  • Proof of workers’ compensation insurance as required by

Georgia law (3 or more employees in Georgia)

 

Residential Light Commercial Contractor

 

This chart shows the definition, financial and insurance requirements for a Georgia Residential Light Commercial Contractor License. The background is a home under construction with a picture of the State of Georgia in front.

 

A Georgia Residential Light Contractor means:

 

“A  person who performs any contractor work or activity performed by a residential-basic contractor and, additionally, shall include such contractor work or activity related to multifamily and multi use light commercial buildings and structures, and their related accessory buildings and structures, which are less than four stories in height; less than 25,000 square feet in aggregate interior floor space, except as otherwise provided in this chapter; and are constructed of wood or light gauge metal frame, brick veneer, prefabricated, or manufactured type of construction; or are pre-engineered steel buildings not exceeding 50,000 square feet of interior floor space; provided that such buildings or structures are not of the type of building or structure that would constitute a special hazard to property or to life and safety of persons.”

 

Exclusions to a Residential Light Commercial License

 

The following are structures which cannot be built under this license:

 

  • Healthcare facilities
  • Most schools
  • Child or adult care facilities
  • Commercial buildings with occupancy over 300 people or 100 people where alcohol is served.
  • Jails/prisons
  • Sleeping accommodations with more than 15 rooms including dormitories, hotels and motels.
  • Department stores or retail over 25,000 square feet.
  • Most commercial buildings over 3 stories tall.

 

There are no financial limits to any contract for a Residential Light Commercial license.

Financial Responsibility Requirements

 

A Residential Light Commercial Contractor must prove financial responsibility through one of the following: 

 

  • A $25,000 surety bond
  • A $25,000 letter of credit
  • A $25,000 line of credit letter
  • A bank credit reference form
  • Proof of $25,000 net worth

 

Insurance Requirements

 

  • Proof of general liability insurance in a minimum amount of $500,000.00 per occurrence.  
  • Proof of workers’ compensation insurance as required by Georgia law (3 or more employees in Georgia).

 

General Contractor

This chart shows the definition, financial and insurance requirements for a Georgia General Contractor License. The background is a construction site with a Georgia state highway sign in front of it.

 

A Georgia General Contractor means:

“A contractor whose services are unlimited as to the type of work which he or she may do, subject to the financial limitations as may be imposed by a subclassification created pursuant to paragraph (8) of subsection (b) of Code Section 43-41-5, and who may contract for, undertake to perform, submit a bid or a proposal, or otherwise offer to perform, and perform any activity or work as a contractor requiring licensure under this chapter including within its scope any work requiring licensure under Chapter 14 of this title.”

 

There are no financial limits to any project for a George General Contractor License.

 

Financial Responsibility Requirements

 

A Georgia General Contractor must affirm a net worth of at least $150,000. Neither a surety bond or a letter of credit can be used to fulfill this requirement.

 

Insurance Requirements

 

  • Proof of general liability insurance in a minimum amount of $500,000.00 per occurrence. 
  • Proof workers’ compensation insurance as required by Georgia law (3 or more employees in Georgia).

 

General Contractor Limited Tier

This chart shows the definition, financial, and insurance requirements for a Georgia General Contractor Limited Tier License. The background is a construction hardhat, blueprint and Georgia peaches at the bottom.

 

A Georgia General Contractor Limited Tier means the same things as a Georgia General Contractor except the project size if limited for this license. 

 

A General Contractor Limited Tier may not undertake any project of more than One Million Dollars ($1,000,000.00). 

Financial Responsibility Requirements

 

A minimum net worth of $25,000 must be affirmed. A General Contractor Limited Tier cannot use a Contractor License Bond or letter of credit to meet these criteria.

Insurance Requirements

 

  • Proof of general liability insurance in a minimum amount of $500,000.00 per occurrence.  
  • Proof of workers’ compensation insurance as required by Georgia law (3 or more employees in Georgia). 

Specialty Contractors

 

Specialty Contractors such as electricians, plumbers and other trades also need to be licensed and often provide a contractor license bond. These trades need different bonds with different requirements. Many can also be purchased online at the Georgia Surety Bond page here. 

 

A Georgia Specialty Contractor means:

 

“A contractor whose scope of work and responsibility is of limited scope dealing with only a specific trade and directly related and ancillary work and whose performance is limited to such specialty construction work requiring special skill and requiring specialized building trades or crafts, including, but not limited to, such activities, work, or services requiring licensure under Chapter 14 of this title.”

 

Other Bonds May Be Required

 

In addition to Contractor License Bonds, Georgia contractors may need other surety bonds as well. Many cities require their own license bonds, including right of way bonds. Many of these bonds can also be purchased instantly online at the Georgia Surety Bond page.

 

Additionally, contractor contractors may need Contract Bonds such as Performance Bonds, Payment Bonds and Bid Bonds. These provide different guarantees. The costs and underwriting requirements are also different. 

 

Summary

 

Georgia General and Residential Contractors need to be licensed. Obtaining a Georgia Contractor License Bond is one way to meet the financial responsibility requirement of these licenses. These bonds are inexpensive and can be purchased online in minutes. Georgia contractors can also learn more by visiting the Surety Bond FAQ page.

 

Helpful Documents

You can access a Georgia Residential or General Contractor bond form by clicking the image below.

State of Georgia Board for Residential and General Contractors Residential Basic

 

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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