Month: November 2019

Who Needs a Tennessee Contractor�s License?

Tennessee�s contractor licensing rules are a little unusual. Home improvement contractors located in certain counties and working on projects valued between $3,000 and $24,999 must be licensed. However, a home improvement license doesn�t authorize a contractor to do any plumbing, electrical, or HVAC work. Even general contractors who are licensed at the state level must obtain a local home improvement license to work on projects under $25,000 in jurisdictions that require local licensing.

Regardless of where you live in Tennessee, if you want to take on projects valued at $25,000 or more, you will need to be licensed as a general contractor, subcontractor, or construction manager at the state level.

General contractor, subcontractor, and construction management licenses are categorized according to the specific type of work, such as building, electrical, mechanical, plumbing, and so on.

Within these categories you must also specify the class of license you are applying for:

• BC � covers all 34 building categories and allows a contractor to bid on any project
• Residential (BC-A) � covers building, repairing, remodeling, or otherwise improving any structure of three stories or less

• Limited Residential (BC-A/r) � covers the same kinds of work as a Residential license but limits the contractor to working on one single family home at a time with a project limit of $125,000There are also three classifications for licensing of commercial contractors: Commercial, Small Commercial, and Industrial.

  What Does the Licensing Process Involve?

  Statewide contractor licenses are issued by the Tennessee Department of Commerce and Insurance Board for Licensing Contractors. License applications must be submitted by the 20th of the month in order to be considered at that month�s Board meeting.

  If your business is a corporation, LLC, or partnership (limited or general), you must register it with the Tennessee Secretary of State before completing these steps in the licensing process:

• Take and pass the Tennessee Business and Law exam (and any trade exam required for the class of license you�re applying for).
• Complete the license application, specifying the license classification.
• Attach a financial statement and proof of general liability and worker�s compensation insurance.
• Purchase a contractor�s surety bond if required for your specific type of license.
• Pay the required fee (currently $250), and submit the application and supporting documents.

Why is a Contractor�s License Surety Bond Required?

Not all Tennessee contractors must provide a surety bond to become licensed. There is a bonding requirement for home improvement contractors licensed at the state level. And some counties require a bond as part of the local licensing process as well.

A Tennessee contractor�s license bond guarantees that a contractor conducts business in accordance with all applicable laws, regulations, and industry standards. It provides protection against financial loss resulting from any unlawful or unethical actions of the contractor.

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How Does It Work?

Any party that suffers a financial loss stemming from the contractor�s failure to operate in compliance with the law and the terms and conditions of the bond can file a claim against the bond. If the surety company that issued the bond deems the claim to be valid and the contractor doesn�t pay it in a timely manner, the company will advance payment to the claimant. But the contractor is legally responsible for paying claims and must reimburse the surety company for any such advance payments.

Understanding How Surety Bonds Work for Contractors

The annual premium for a Tennessee contractor�s license bond is a small percentage of the required bond amount, which is established by the government agency requiring the bond. The surety company establishes that percentage based on the contractor�s personal credit score and business financials. The premium rate for contractors with good credit is typically in the range of 1% to 3%.

Apply For A Bond

You can count on Single Source Insurance to provide the Tennessee�s contractor license bond you need quickly and affordably. Contact us today to request a quote.

Who Needs an Oregon Contractor�s License?

In Oregon, anyone working for compensation in any construction field that involves making improvements to real property must be licensed by the Oregon Construction Contractors Board (CCB).

There are three basic types of licenses:

• Commercial (for work on both small and large commercial properties)
• Residential (for work on residential and small commercial properties)
• Dual license for both commercial and residential work

One or more endorsements must be added to any of these licenses to specify the type(s) of structures the licensee is authorized to work on. Each endorsement has certain limitations and specific bonding and insurance requirements. This article focuses on the licensing of residential and commercial licenses with a general contractor endorsement. Be aware that there are two levels of general contractor endorsement for commercial contractor licenses, differentiated by the contractor’s experience level.

What Does the Licensing Process Involve?

There are a number of steps that must be completed before submitting a license application to CCB:

• Determine the type of license and endorsement(s) needed.
• Complete pre-licensing training and pass the required exam.
• Register your business with the Oregon Secretary of State, Corporation Division.
• Purchase a surety bond in the required amount for the type of license and endorsement(s).
• Purchase general liability insurance naming CCB as the certificate holder.
• Purchase worker�s compensation insurance if the business will be hiring employees.
• Obtain state and federal tax ID numbers from the Oregon Department of Revenue and the Internal Revenue Service respectively.
• Complete the appropriate application for the type of license and endorsement.

Once all of these steps have been accomplished, you can go ahead and submit the competed application along with the original bond, insurance certificate, and application fee (currently $250 for a two-year license).

Why is a Contractor�s License Surety Bond Required?

The surety bond serves as a guarantee that the licensed contractor will conduct business in a completely lawful and ethical manner. Any failure to do so that results in a financial loss entitles the injured party to file a claim against the bond. The bond ensures that funds will be available to compensate claimants for such losses.

Residential General Contractors and Commercial General Contractors must obtain a bond in the amount of $20,000. Commercial General Contractors, Level I must purchase a $75,000 surety bond.

How Does It Work?

When a claim is filed against the bond, the surety company that issued the bond will investigate to ensure that the claim is valid. In most cases, the surety company will pay the claim and then collect reimbursement from the contractor. The terms of the bond, which specify what laws, regulations, and standards the contractor must abide by, also indemnify the surety company and make the contractor legally responsible for paying all valid claims.

Understanding How Surety Bonds Work for Contractors

The premium a contractor pays for the bond is a small percentage of the required bond amount. The surety company determines what that percentage (the premium rate) will be based primarily on the contractor�s personal credit score and business and personal financial strength. The premium rate is usually between 1% and 3% for those with good credit.

Get Bonded Today

Whatever the amount of the bond you need to obtain your Oregon contractor�s license, Single Source Insurance can get you the best premium rate possible. Request a quote online today.

Who Needs a North Carolina Contractor�s License?

North Carolina licenses contractors in many construction-related fields at the state level. General contractors are licensed by the North Carolina Licensing Board, while electrical contractors are licensed by the State Board of Examiners of Electrical Contractors. There is also a licensing board for plumbing, heating, and fire sprinkler contractors. Some municipalities also require contractors to be licensed in their jurisdictions.

This article focuses on the licensing of general contractors. There are different types of general contractor licenses for 1) building contractors, 2) residential contractors, 3) highway contractors, 4) public utilities contractors, and 5) specialty contractors (18 different specialties).

Each of these general contractor categories is further divided into limited, intermediate, and unlimited licenses, which are differentiated by the extent to which applicants� current assets exceed their current liabilities.

What Does the Licensing Process Involve?

To become licensed in North Carolina, a general contractor must pass a qualifying exam and submit an application and the required fee to the Board. Currently, the fees are $75 for a limited license, $100 for an intermediate license, and $125 for an unlimited license.

Applicants must also demonstrate the necessary level of working capital or obtain a surety bond before they will be issued a license. The required amount of the surety bond depends on the license limitation:

• Limited = $175,000 bond
• Intermediate = $500,000 bond
• Unlimited = $1 million bond

Why is a Contractor�s License Surety Bond Required?

The surety bond is a substitute for proof of net worth to meet the Board�s requirement for adequate working capital. It also serves as a guarantee that the contractor will conduct business in accordance with all applicable laws, regulations, and industry standards. Finally, it provides funds to compensate anyone who suffers a financial loss due to the unlawful or unethical actions of the contractor.

How Does It Work?

The legally binding surety bond contract spells out the responsibilities of three parties:

• The obligee (the licensing board that requires the bond)
• The principal (the contractor who must purchase the bond)
• The surety (the company that underwrites and issues the bond)

The bond contract is very specific about what the principal must do and not do to avoid violating the contract. If the principal does violate the contract and someone suffers a financial loss as a result, the injured party can file a claim against the surety bond.

If the principal doesn�t pay a claim in a timely manner, the surety will pay it, but only as a courtesy to the claimant. The surety has no legal responsibility for paying claims. That responsibility belongs solely to the principal. In fact, an indemnification clause in every surety bond contract holds the surety harmless and gives the surety the right to pursue the principal for reimbursement.

Understanding How Surety Bonds Work for Contractors

To purchase a surety bond, the principal pays an annual premium that is a small percentage of the required bond amount�typically 1% to 3% for those with very good credit.

Get The Bond You Need

Request a quote today for the surety bond you need to get or renew a North Carolina contractor�s license.

Who Needs a Georgia Contractor�s License?

Georgia requires contractors who work on projects valued at more than $2,500 to be licensed by the State Licensing Board for Residential and General Contractors, which is part of the Professional Licensing Boards Division of the Secretary of State�s Office. Working on a project valued at more than $2,500 without a license is illegal.

At the state level, there are four basic types of contractor�s licenses in Georgia:

• Residential Basic Contractor (reciprocity with Louisiana, Mississippi, and South Carolina)
• Residential Light Commercial Contractor (no reciprocity)
• General Contractor (reciprocity with 15 other states)
• General Contractor Limited Tier (no reciprocity)

Licenses are issued to individuals and to qualifying agents on behalf of a business organization. Note that there may be additional licensing or permitting requirements at the local level as well.

What Does the Licensing Process Involve?

Each type of contractor�s license has certain requirements regarding work experience, projects, education, examinations, financial responsibility, and insurance. You can access a Comparison Chart spelling out the specific requirements for each type of license on the State Licensing Board’s website.

One of the biggest areas of difference among the four license types is the financial requirements for licensure. There is a net worth requirement across the board: $150,000 for those applying for a General Contractor�s license and $25,000 for applicants for any of the other three license types. However, only applicants for a Residential Basic Contractor or Residential Light Commercial Contractor license are permitted to purchase a surety bond to meet the net worth requirement.

Why is a Contractor�s License Surety Bond Required?

A Georgia Contractor�s License bond in the amount of $25,000 serves several purposes. It:

• Is a valid substitute for proof of personal net worth
• Guarantees that the contractor will conduct business in accordance with the law and ethical standards of the industry
• Provides compensation for any party suffering a financial loss as the result of the contractor�s unlawful or unethical actions

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How Does The Bond Work?

The surety bond agreement is a legally binding contract that involves three parties. The licensing board requiring the bond is known as the obligee. The contractor purchasing the bond is the principal. And the company that issues the bond is referred to as the surety. The terms of the agreement spell out the specific responsibilities of each of these parties.

If the principal violates any of the terms and conditions of the surety bond agreement, any party who suffers a financial loss as a result of that violation may file a claim against the bond. The surety will investigate the claim to make sure it�s valid before any further action is taken.

While the principal is legally obligated to pay valid claims against the bond, in many cases the surety will make an advance payment on behalf of the principal. However, the surety will then seek reimbursement from the principal. The advance payment I simply a courtesy to make sure that the claimant is compensated in a timely manner.

Understanding How Surety Bonds Work for Contractors

The principal will pay a small percentage of the $25,000 required bond amount as the annual premium for the bond. That percentage, or premium rate, is established by the surety on a case-by-case basis. The primary factor considered in setting that premium rate is the principal�s personal credit score. With good credit, the premium rate may be as low as 1% to 3%, but credit-challenged individuals may pay more.

Get The Bond You Need

At Single Source Insurance, we�re here to help you with all of your bonding needs as a Georgia construction contractor. Apply online today!

Who Needs a Florida Contractor�s License?

In Florida, contractors are licensed at both the state and local levels. You may choose to obtain a �certified� license that allows you to work as a contractor anywhere in the state or a �registered� license if you will be working only within a specific municipality or county. In either case, the licensing process is carried out through the Florida Construction Industry Licensing Board, which is part of the Florida Department of Business and Professional Regulation (DBPR).

Both certified and registered licenses are issued in three categories: building contractor, residential contractor, and general contractor. There are restrictions on what types of work that building contractors and residential contractors can do, but general contractors have no such limitations. Both certified and registered licenses are further classified as �individual: or business.�

What Does the Licensing Process Involve?

This article focuses on licensing requirements for general contractors, both certified and registered. Here�s what you need to know about the licensing process for each:

Certified General Contractors

Registered General Contractors

Passing score on the Florida State Construction Examination

Passing score on the Florida State Construction Examination or certificate of competency issued by the jurisdiction

Credit score report showing FICO score of 660 or higher *

Credit score report showing FICO score of 660 or higher *

Proof of 4 years of experience or combination of experience and education

N/A

Criminal background check and fingerprinting

Criminal background check and fingerprinting

Proof of adequate general liability and property damage insurance

Proof of adequate general liability and property damage insurance

Proof of workers compensation insurance or an exemption

Proof of workers compensation insurance or an exemption

Completed application

Completed application

Payment of fee (exact fee depends in when the exam was passed and when the application is submitted)

Payment of fee (Exact fee depends on whether the application is submitted in an even year or an odd year)

* Applicants with FICO scores below 660 must purchase a Florida contractor�s surety bond in lieu of proof of financial solvency.

Why is a Surety Bond Required?

The purpose of a Florida contractor�s license bond is to ensure that all licensed or registered general contractors conduct business in a lawful and ethical manner—in compliance with all applicable statutes, rules, and regulations. These are identified in the terms and conditions of the surety bond agreement.  The bond protects the state against being held liable for any financial loss suffered by consumers due to the contractor’s violation of the agreement.

How Does The Bond Work?

The three parties to the bond agreement are the Florida Department of Business and Professional Regulation (the obligee), the general contractor (the principal), and the company issuing the bond (the surety). If the contractor fails to comply with every aspect of the bond agreement, any party who suffers a financial loss as a result of that failure can file a claim against the bond.

When a claim is filed, the surety will investigate to make sure it is valid. If the principal does not pay the claim quickly, the surety typically will cover it, although payment of claims is the principal�s legal responsibility. The surety�s payment is simply an advance, which the principal must pay back to the surety.

What Does The Bond Cost?

The annual premium for a Florida contractor�s license bond is only a small percentage of the required bond amount. The surety sets the premium rate based on the principal�s personal credit score and financial status. The better the applicant�s credit score, the lower the premium rate.

Get Bonded Today

Let us help you get the contractor�s license bond you�ll need to obtain or renew your Florida contractor�s license. Contact Single Source Insurance today.

Who Needs a California Contractor�s License?

Anyone who works as a contractor in California and charges more than $500 for a single project or multiple projects (labor, materials and other costs) must be licensed by the California Contractors State License Board (CSLB). This requirement applies to individuals and business entities working as contractors, subcontractors, specialty contractors, or home improvement specialists.

Working as a contractor without being properly licensed can result in a misdemeanor conviction that carries the potential for fines and jail time.

What Does the Licensing Process Involve?

Every applicant for a new California contractor�s license must:

• Be at least 18 years old
• Meet certain experience requirements and submit a Certification of Work Experience
• Pass an examination
• Submit a completed application for Original Contractor�s License
• Undergo a fingerprint and criminal background check
• Obtain a $15,000 contractor�s surety bond or make a $15,000 cash deposit
• Pay the application processing fee (currently $330)

Contractors doing asbestos abatement, handling hazardous materials, or installing or removing underground storage tanks must also meet a number of licensing requirements in addition to those that apply to all contractors.

Why is a Contractor�s License Bond Required?

All license surety bonds serve as a guarantee to conduct business in accordance with all relevant statutes, rules, and regulations governing the industry. The aim is to protect others against financial loss due to the unlawful or unethical actions of the bonded individual. A contractor�s license bond is no different.

A contractor�s license bond protects the licensing agency, the California Contractors State License Board (CSLB), against liability for damages suffered by consumers as a result of a contractor�s failure to abide by the laws and ethical standards set forth in the terms and conditions of the bond. Any violation of those terms and conditions gives the aggrieved party the right to file a claim against the bond.

How Does The Bond Work?

When a claim is filed against the bond, the company that issued it (referred to as the �surety�) will first ensure that the claim is valid. If the contractor (also known as the bond�s �principal�) does not settle the claim quickly, the surety will pay the claim. The surety will then pursue the principal for reimbursement, as the principal is legally responsible for paying all claims.

What Does The Bond Cost?

The premium for a California contractor license bond is calculated as a small percentage of the required $15,000 bond amount. That percentage, known as the premium rate, is determined by the surety based largely on the contractor�s personal credit score and financial status. Applicants with good credit typically pay between 1% and 3%. Those with poor credit will likely pay a higher rate.

Get The Bond You Need

At Single Source Insurance, our experienced surety bond agents are knowledgeable about California�s contractor bonding requirements and are eager to help you get the bond you need. Apply online today!

Who Needs a Virginia Contractor�s License?

In Virginia, contractors are licensed by the state�s Department of Professional and Occupational Regulation (DPOR). You�ll need to obtain a contractor�s license in one of the following categories if you do construction work including demolition, repair, or improvement projects valued at more than $1,000.

• Class A: Required for contractors handling individual projects of $120,000 or more—or multiple projects totaling $750,000 or more during a 12-month period.
• Class B: Required for contractors handling single projects valued at $10,000 to $120,000 or multiple projects totaling $150,000 to $750,000 over a 12-month period.
• Class C: Required for contractors handling single projects valued between $10,000 or multiple projects totaling less than $150,000 over a 12-month period.

Specialty contractors (e.g., plumbing, HVAC, electrical) will need to obtain a license in their particular field as well.

Be aware that Virginia issues contractor licenses only to business entities, not to individuals. To obtain a contractor�s license, the business must include a designated qualified individual who meets the states experience requirements. Requirements include 5+ years of experience for a Class A license, 3+ years for a Class B license, and 2+ years for a Class C license.

What Does the Licensing Process Involve?

Here are the steps to become a licensed contractor in Virginia:

• Establish a business entity (e.g., sole proprietor, LLC, partnership, corporation, etc.) and register it with the Virginia State Corporation Commission.
• Identify the responsible management (owners, officers, etc.), qualified individuals, and a designated employee who has passed the required 8-hour pre-license course and applicable exam portions (Class A and Class B licenses only).
• Complete and submit the license application and attach any required documentation, including proof of net worth or a Virginia Contractor License Bond (Class A and Class B licenses only). To avoid delays or the return of your unprocessed application, be sure to include the appropriate fee (listed on the first page of the application).

Why is a Surety Bond Required?

Virginia requires Class A license applicants to prove that the business has a net worth of $45,000 ($15,000 for Class B license applicants). Net worth can be demonstrated by providing a financial statement or CPA review/audit, but many applicants choose to purchase a surety bond instead. The purpose of the bond is to ensure that the contractor has the financial means to meet its obligations without risk of insolvency.

A Virginia contractor�s license bond provides the funds to compensate any party that suffers a financial loss due to the contractor�s unlawful or unethical conduct.

How Does The Bond Work?

A party who is injured financially by the contractor�s actions can file a claim against the contractor�s license bond. The surety company that issued the bond will investigate to determine whether the claim is valid. If the contractor doesn�t make timely payment on a claim, the surety company may front the payment�but only as an advance that the contractor will subsequently have to repay. The contractor, not the surety company, is legally responsible for paying claims.

What Does The Bond Cost?

The contractor pays an annual premium that is only a small percentage of the $45,000 or $15,000 required bond amount. The surety company determines that percentage, known as the premium rate, based on the business owner�s credit score and financial statements for the business and its owners. Those with good credit typically pay a premium rate of between 1% and 3%. Those with credit challenges may pay a higher premium rate.

Get Bonded Today

You can count on our seasoned surety bond agents to get you the bond you need in order to obtain or renew a contractor�s license in the state of Virginia. Apply online today!

Who Needs a Texas Contractor�s License?

In Texas, only specialty contractors�HVAC, plumbing, and electrical�are licensed at the state level. Licensing occurs through the Texas Department of Licensing and Regulation. Contractors doing new construction or improvements to existing properties are not subject to any statewide licensing requirement.

There are, however, a number of municipalities in Texas that do require construction contractors to obtain a local license or permit.

What Does the Licensing Process Involve?

Local processes for licensing construction contractors in Texas vary greatly from one municipality to the next. Some cities have much more stringent license and permit requirements than others. The best way to find out what licenses or permits you may need to obtain for the area where you plan to conduct business is to check with the local city governments.

Many local governments require contractors to provide proof of their financial resources as a way to ensure their solvency before they will issue a license or permit. In many cases, this requirement can be satisfied by purchasing a Texas contractor�s license surety bond.

Why is a Surety Bond Required?

The purpose of a contractor�s license bond is to ensure that money will be available to compensate any party that suffers a financial loss resulting from the contractor’s unlawful or unethical conduct. The surety bond agreement is a legally binding contract between the city, the contractor, and the surety bond company. The bond identifies the laws, rules, and regulations the contractor must abide by.

How Does The Bond Work?

Each party to a surety bond agreement has a specific role and legal responsibilities:

• The municipality requiring the bond is called the �obligee.�
• The contractor required to purchase the bond is the �principal.�
• The company issuing the bond is the �surety.�

The obligee establishes the required amount of the bond and the conduct required of the principal. The principal has sole legal responsibility for paying claims against the bond. The surety guarantees that valid claims will be paid.

When a claim is filed against the bond, the surety will first investigate to make sure that the claim is valid. While the expectation is that the principal will pay any valid claim, that may not happen in a timely manner. When the principal doesn�t settle or pay the claim quickly, the surety will step in to pay it, but only as a temporary measure.

Surety bond agreements include an indemnification clause that holds the surety harmless. The principal is legally obligated to reimburse the surety for claims paid in advance on the principal�s behalf. The surety may take legal action to collect from the principal if necessary.

What Does The Bond Cost?

To determine the annual premium for a contractor�s license or permit surety bond, the surety multiplies the required bond amount by a premium rate the surety establishes for each applicant on a case-by-case basis. The primary factor in determining the premium rate is the contractor�s personal credit score. Applicants with good credit typically pay a premium rate of between 1% and 3%. Those with poor credit will likely pay a higher rate.

Get Bonded Today

If you need a surety bond in order to obtain a contractor�s license in Texas, apply online with Single Source Insurance today.