What is a license bond? What is a license surety bond? Why do I have to buy one? It is set up by the contractor’s board to protect the consumer. The contractors board is set up under the Department of Consumer Affairs. It protects the consumer from being robbed or having something stolen or having problems when they are working with contractors. The $15,000 license bond protects the consumer in case there is a problem. It is a line of credit, it is NOT insurance. If there is a claim, you have to pay it back. I recommend you do everything you can to stop someone from making a claim on your bond. You could send someone else in to take over the situation, or give the customer their money back. Once you have a claim on your bond, it makes it very difficult to get another one because statistically it shows that you have a higher risk of getting another claim.
Qualifier bond If you have someone qualifying for your license, taking the test for you to get your license, that person will need a bond if they don’t have ownership of your business. Many times, if the person has at least 10% ownership, this bond requirement can be waived. This type of bond is common when you have an employee as the qualifier for your license.
LLC Bond If you decided to get an LLC license, you will be required to get an LLC Employer Worker Bond. This protects the employees in case for some reason you don’t pay your employees.
Disciplinary Bond Sometimes contractors have a disciplinary problem that s on the board website, and the Board may require you to get a disciplinary bond to be active. It typically needs to be active for 2 years. This is a bond that is on top of your contractor license bond. It means you have 2 bonds in place to protect the consumer, because there has already been a complaint against you.
These types of bonds are called Commercial License Bonds.
I hope this gives you more information and helps you understand more about bonds and how they work.
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