Contractor License Bonds
The right Contractor License Bond can put your client’s mind at ease while protecting you both from costly damages that could derail your construction project and your business. At DJM Insurance, we pride ourselves on being different from other contractor insurance companies. We offer the highest caliber of Contractor License Bonds so both you and your client are protected for greater peace of mind.
Other reasons why DJM is different from so many other insurance companies include:
- Competitive Quotes
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Everything you need to know
Have questions about Contractor License Bonds?
We’re here to help you get the right insurance policy for your needs and your budget. Below are some common questions we often answer about Contractor License Bonds, but don’t hesitate to contact us to answer specific questions about the Contractor License Bonds we offer.
Contractors are required to have a Contractor License Bond. This bond acts as a pledge on the part of the contractor to comply with all local and state regulations when protecting clients from financial loss. Other bonds a contractor may need in order to begin work include a bid performance bond, a payment bond, a maintenance bond, and more, depending on the type of work being done, local regulations, and requests from the client.
In California, contractors must post a surety bond, but amounts can vary depending on the type of work being done. The bond amount is always higher than the actual cost of the bond, and the payout amount depends on the type of work being done. Contractors with great credit can pay as little as one percent of the bond total, with most contractors paying between two and five percent of the bond amount.
Payment bonds guarantee that subcontractors and material suppliers will be paid when the project is complete. They are required by the Federal Government, so they are offered in conjunction with other bonds, like contractor license bonds and bid performance bonds.
First, the contractor completing the work obtains a bond. Once the project is complete, the bond agent is notified and the bond line is freed. If the job wasn’t completed properly, the client can request the funds of the bond and use them to pay another contractor to finish the job.
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