We have insurance, is a construction bond necessary?

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The answer is a resounding YES. Besides the fact that is illegal to be a licensed contractor in California without an active contractor’s license bond, having a bond is beneficial to your company. The California Contractors State License Board (CSLB) requires contractors to have $12,500 contractor license bonds. The CSLB keeps tabs on all contractors and if you do not have an active license bond, your license can be suspended, which can result in project delays and could subsequently cost your company thousands of dollars.

Most homeowners are computer savvy, especially with the help from review websites such as Angie’s List and Yelp. They know that they should check a contractor’s license and bond information before hiring them. Some will even request a copy of your bond and insurance information. Therefore, it is important that you get your bond from a reputable company.

Using a broker can give you many options and find the best price for your contractor’s bond. If you have good credit, then there will be many options and bond pricing is relatively inexpensive. However, if you have bad credit the price of a bond will be higher but there are options.

In addition to fulfilling your legal licensing obligations, having a large bond capacity can increase project opportunities, as your company will be deemed a good risk since the surety company has already evaluated the risk before issuing a bond.

Besides obtaining a construction license bond for your contractor’s license, you should also make sure that your subcontractors are bonded as well. This will protect both you and the customer.

If you live in Sacramento or anywhere throughout California and would like more information, please contact us and we can get you headed in the right direction.


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