How the Bonding Process Works: A Step-By-Step Overview from Applying to Approval

Looking to become a licensed contractor in California? Did you know that applicants for a contractors license must obtain a $25,000 contractor license bond before the CSLB can issue, reactivate or renew an active license? Read below to discover what you need to know about contractor license bonds, also known as surety bonds, so you’re always ready to take on that next job.  

What is a Contractor License Bond?

In the 1960s, the CSLB first started requiring a contractor license bond, back then it was in the amount of $2,500. Today the required bond amount is $25,000, a recent increase from $15,000 took place in January 2023. Designed to protect consumers and unpaid employees, a California contractor license bond is a type of surety bond – it is not insurance, contractors are still financially responsible for any paid claim made against the bond.

A license bond is required for all individuals and businesses that are engaged in construction or contracting work within the State. Once again, the purpose of a contractor's bond is not to directly benefit the contractor, but rather consumers against detrimental or negligent actions of a contractor. 

As mentioned above, a contractor license bond IS NOT insurance. To get protection for yourself and business, you’ll need general liability insurance. 

How Much Does a Contractor License Bond Cost?

Contractor License Bonds can range from $109 and $2000+, depending on a variety of factors such as personal credit, license history, term limit, and license classification. Bond terms typically range from one to three years, but some surety companies will offer longer terms depending on certain criteria.  

What is the Process to Get Bonded?

1. Find a Bond Provider: Look for a licensed surety bond provider that is authorized to issue contractor license bonds in California.
    
2. Application Process: Apply for a quote. Be prepared to provide personal and business information, details about license classification(s), and your desired bond amount.
    
3. Underwriting and Approval: An underwriter will review the application and assess financial stability and creditworthiness.
    
4. Pay the Premium: Approved applicants must pay the bond premium to the bond provider. This is the cost incurred for the bond.
    
5. Bond Issuance: Once the premium payment is processed, the bond provider will issue the contractor license bond.
    
6. Submit Bond to CSLB: A copy of the bond must be submitted to the CSLB as part of the contractor licensing application. CCIS takes care of this step for you!
    
7. Maintain Bond Coverage: Contractor license bonds are valid for a specific period, typically ranging from one to three years. A bond must be renewed by its expiration date in order for an individual or business to maintain an active license.
    
8. Respond to Claims: In the event of a valid claim against a bond, the bond holder must cooperate with the surety company's investigation.

Obtaining a contractor license bond is an essential step for individuals and businesses aspiring to become licensed contractors in California. This surety bond, mandated by the California Contractors State License Board (CSLB), serves as a crucial layer of protection for consumers and the state against potential financial harm resulting from a contractor's actions. While distinct from insurance, this bond demonstrates a commitment to professionalism and accountability within the construction and contracting industry.

Navigating the realm of Contractor License Bonds may seem intricate, but with the guidance of experts and reputable resources, you can confidently embark on your path towards getting licensed.