Before jumping on to the cost of California contractor bonds, let’s first define a contractor bond. In simple terms, a contractor bond is a surety that protects the contractor in case of negligence claims. It also protects the project owner by guaranteeing them that the contractor will do the work as required. The other party that is protected by a contractor bond is the government body that gives the green light for the contractor to commence work. With this background in mind, let’s now focus on the costs.
The cost of contractor bonds varies from State to State. In the state of California, contractors who perform work valued over $500 are required to obtain a contractors state license board license. California state law also requires contractors to post a $15000 bond. However, this represents the total amount that would be paid in case a claim is made. What the contractor actually pays is a premium, which varies depending on the financial stability and creditworthiness of the contractor. As such, a contractor with a clean credit record pays a lower contractor bond premium than one with a bad credit score.
The amount of premiums payable also depends heavily on the agency you choose for your contractor bond. For instance, here are the rates of contractbond.org, one of the agencies where you can get a contractor bond in California. Their rates start at $65 a year, which is relatively affordable, compared to other agencies. This agency also has a number of other advantages that make a lot of sense to California based contractors. For instance, it helps out contractors that have a bad credit rating. Due to the ups and downs of the construction market, many contractors find themselves with a bad credit score, which can raise the premiums payable for contractor bonds. A contractor with a bad credit score can end up paying hundreds of dollars over and above the average premium for a contractor bond. Contractbond.org helps such contractors lower their costs by financing them to help improve their credit scores. On top of that, this agency offers fast bond services, which cuts on the cost of having to go back and forth just to get a contractor bond.
In essence, the cost of contractor bonds is subject to multiple factors, ranging from the agency you go for, your credit rating, to the type of work for which, you are seeking a contractor bond. If you do your research well and seek the services of a good agency like Contractbond.org, you should be in a position to save thousands of dollars in the construction business. That’s money that you can channel into other aspects of your business and shore up the bottom-line. Besides, with the help they give to contractors facing financial difficulties, developing a working relationship with them is a strategic move in the long run. Contractors are always at risk of credit challenges and a good partner is a valuable asset. Good agencies help you consistently keep your contractor bond premium costs lower than the State average.