The Best Place to Buy a California Contractor License Bond


Are you supposed to buy a contractor license bond (CLB) in California? This legally binding contract is necessary for protecting your clients and obtaining a contractor license.

Unless you adhere to the terms of your CLB, your clients can file a claim to get financial compensation. The surety agency is in charge of investigating the claim to ensure its validity. If the claim is valid, they will pay for it, and you will have to reimburse the agency in full.

If buying a CLB, follow the helpful tips below.

Understand the meaning of a license bond

The state of California obliges contractors to purchase a license bond in order to comply with application process requirements for obtaining a permit. This agreement serves as a guarantee that the public will receive financial compensation if any professional fails to meet licensing regulations. It legally binds three involved parties, known as the principal, obligee, and surety.

The principal is the individual required to obtain a license bond, referring to the contractor. In contrast, the obligee is the party that receives the obligation. Consequently, if the principal fails to comply with the requirements and regulations imposed by the agreement, the obligee can make a claim.

Moreover, surety refers to the party in charge of assuring the principal and obligee perform their tasks related to the agreement. It guarantees the principal’s obligations, and if it fails to meet them, the surety will provide the necessary compensation to the obligee.

Determine your requirements

After understanding the meaning of this agreement, you should start determining your requirements. Firstly, you should decide on the types and number of CLBs. License bonding is a must in almost all states, allowing contractors to operate their business legally. There are different requirements, as some towns and cities require a local bond in addition to the state one.

There might be other requirements to fulfill, which depend on the type of work you wish to perform. For instance, two separate agreements might be necessary to perform general contracting and electrical contracting work.

Find a surety agency

The following step is applying with a surety bond agency licensed in California. Most agencies allow candidates to submit online applications. Candidates are expected to have information about the bond, their work history, and finances. Surety companies perform credit checks on company owners to determine their eligibility and pricing.

In addition, contractors whose credit is excellent should expect to receive the most favorable rates. Conversely, those with poor credit might be declined or pay higher rates. It’s important to remember that the credit check won’t affect your credit score. After running a credit check, candidates are provided with a quote.

A California contractor license bond costs anywhere between $65 and $450 annually. There is a myriad of reputable brokers, such as contractorbond, collaborating with various surety underwriting markets. The pricing rate is determined based on different factors, including the experience and credit score of the applicant.

Applicants whose credit score is above 720 are expected to pay as little as $62 annually. Those with a score from 625 to 649 should pay $128 a year. If your credit score is below 599, you’ll probably pay $450 annually.

Surety agents should be given correct financial information for the approval procedure to end quickly. If the provided financials check out, the CLB can be underwritten on the same day of the inquiry. While CLB requirements differ from state to state, applicants are considered qualified if they have good credit and appropriate financials.

Submit the bond to the state

The ultimate step is signing and submitting your CLB to the state. After your license bond is finally delivered to you, you have to verify whether the information is accurate, sign the agreement, make a copy for yourself, and send it to the state along with the rest of the paperwork.

Once the state of California receives the bond, they should get in touch with you and send you the license. This process might last between one and three weeks.

Final thoughts

Make sure you get a CLB to obtain a contractor license.

Otherwise, you won’t be able to operate legally!