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In Arizona, contractor licenses are issued by the Arizona Registrar of Contractors. Purchasing a contractor license surety bond is a required step in both the licensing and license renewal processes. The bond is a contractor�s guarantee to abide by all Arizona laws and regulations while doing business within the state.
Arizona contractor license bonds provide protection for the state and consumers against financial loss due to a contractor�s unlawful or unethical actions. For example, the state incurs a loss when a contractor fails to pay required taxes or fines. The �owner� of a residential or commercial construction project could suffer a financial loss through fraudulent billing by a contractor. A contractor license bond provides a source of funds to compensate such injured parties who have valid claims against the bond.
Every contractor operating in Arizona must be properly licensed by the Arizona Registrar of Contractors (AZROC), which issues both residential and commercial contractor licenses. Both of these categories are subdivided into general and specialty contractors. Contractors that work on both residential and commercial projects may need a dual license.
The required bond amount varies depending on the specific license type and the contractor�s estimated volume of work to be completed in the next year. Consequently, the required bond amount for a given contractor can increase or decrease at each renewal. For a residential contractor, the highest bond amount is $15,000 which is for a residential general contractor with an estimated volume of $750,000 or more.
A surety bond agreement is a legally binding contract that brings together three parties:
When a party who has been harmed financially by a contractor�s unlawful or unethical actions files a claim against the contractor�s license bond, the surety manages the claims process. The first step is to conduct an investigation to determine the bond�s validity. A valid claim will be paid by the surety on behalf of the principal, who is then obligated to reimburse the surety.
The annual premium for an Arizona contractor license bond is a small percentage of the required bond amount�a smaller percentage for some than for others. That�s because the premium rate varies depending on the principal�s personal credit score, among other factors.
Someone with excellent credit may pay as little as 1% of the required bond amount. A principal with poor credit will pay a significantly higher premium rate.
Request a convenient online quote today, or call us to discuss the Arizona contractor license bond you need to operate legally within the state.����
