Illinois requires plumbers to register with the state and obtain an Illinois Plumbing Contractor Bond. Learn more about these bonds including how to obtain one, what they cost and what they guarantee.
The state of Illinois defines a Plumbing Contractor as,
“any licensed person authorized to perform plumbing as defined in this Act, but does not include retired plumbers as defined in this Act.”
Plumbing is defined as,
“the actual installation, repair, maintenance, alteration or extension of a plumbing system by any person.
“Plumbing” includes all piping, fixtures, appurtenances and appliances for a supply of water for all purposes, including without limitation lawn sprinkler systems and backflow prevention devices connected to lawn sprinkler systems, from the source of a private water supply on the premises or from the main in the street, alley or at the curb to, within and about any building or buildings where a person or persons live, work or assemble.
“Plumbing” includes all piping, from discharge of pumping units to and including pressure tanks in water supply systems.
“Plumbing” includes all piping, fixtures, appurtenances, and appliances for a building drain and a sanitary drainage and related ventilation system of any building or buildings where a person or persons live, work or assemble from the point of connection of such building drain to the building sewer or private sewage disposal system 5 feet beyond the foundation walls.
The Act simply means the Illinois Plumbing License Law which can be found here. The purpose of the Illinois Plumbing License Act is to protect the public by ensuring plumbers are licensed and registered and complying with a Minimum of Plumbing Code standards. It is considered essential to Public interest.
An Illinois Plumbing Contractor Bond is a License Surety Bond that guarantees that the plumber will comply with the laws of the Illinois Plumbing Code Chapter 894. Should the plumber not comply, a claim can be made against the surety bond.
The state requires all registered plumber to provide an Illinois Plumbing Contractor Bond in the amount of $20,000. It is important to understand that $20,000 is the maximum liability of the bond, often referred to as the Penal Sum. Although one or more claims may exceed this amount, this is the maximum amount the surety bond company is liable to pay. However, exhaustion of the bond does not excuse the plumbing contractor from the liability of correcting work.
The Illinois Plumbing Contractor is the Principal on the bond. The plumbing contractor pays a premium and provides indemnity to a Surety Bond Company. The Surety Bond Company then makes a promise to the State of Illinois Department of Public Health (the Obligee) that the contractor will comply with the state’s plumbing laws.
If the Illinois Plumbing Contractor does not comply with the laws or has faulty work, a claim can be made against the Plumbing Contractor Bond. If a claim is made against the Illinois Plumbing Contractor Bond, the Surety Bond Company will investigate the claim. If the claim is valid, the Surety Bond Company will pay the State of Illinois and seek reimbursement from the Plumbing Contractor under the Indemnity Agreement. Illinois Plumbing Contractors should understand that surety bonds are not insurance. You can read about the differences between surety bonds and insurance here.
Illinois Plumbing Contractor Bonds are very inexpensive. Many plumbing contractors can expect to pay $100 a year or less. Some surety bond companies also provide discounts for contractors that purchase multiple years upfront.
Illinois Plumbing Contractor Bonds can be purchased online instantly and without a credit check. Simply fill in the licensed contractor’s information, purchase and print the bond. When purchasing the Illinois Plumbing Contractor Bond, it is important to select the correct entity such as Sole Proprietor, LLC, Partnership, or Corporation.
Illinois allows Plumbing Contractors to post an Irrevocable Letter of Credit (ILOC) instead of an Illinois Plumbing Contractor Bond. The ILOC must be in the same amount as the bond and be from a financial institution guaranteeing that funds shall be available only to the Department and shall be released upon written notification by the Department. There are downsides to an ILOC for contractors. It may be more expensive and time consuming than obtaining a surety bond. Contractors can read more about the differences between surety bonds and ILOCs here including the advantages and disadvantages.
An Illinois Plumbing Contractor Bond may be canceled by the surety bond company at any time by giving the State of Illinois 15 days written notice. However, the surety bond company’s liability will still exist for any acts that occurred while they were on the bond. If a bond is canceled, the Plumbing Contractor will need to replace it with another bond BEFORE any work is performed, or risk discipline.
Illinois Plumbing Contractors may need additional surety bonds as well. For example, contractor performing sprinkler and irrigation work may need an Illinois Irrigation Contractor Bond, which can also be purchased online. Contract Bonds may also be needed such as Bid Bonds, Performance Bonds and Payment Bonds.
The fines for not having an Illinois Plumbing Contractor Bond and license can be significant. These bonds are inexpensive and easy to obtain so there is little reason not to get one. The bonds can be purchased online, instantly anytime for almost any plumbing contractor.