Month: December 2019

In the state of Washington, both general contractors and specialty contractors are licensed through the Department of Labor & Industries, Contractor Registration Section. Learn how to get a general contractor�s license in Washington state.

Who Needs a Washington Contractor�s License?

In Washington, anyone engaged in building altering, remodeling, repairing, or otherwise developing residential properties must obtain a contractor�s license. This includes people who do demolition work or move residential buildings.

The Licensing Process

The licensing process for general contractors is similar to the process for specialty contractors, but only specialty contractors are required to pass an exam. For general contractors, the licensing process consists of the following steps:

1. Obtain an Employer Identification Number (EIN) from the Internal Revenue Service unless you are a sole proprietor with no employees.
2. If the legal structure of your business is anything other than a sole proprietorship, register it with the Washington Secretary of State.
3. Register your business with the Washington Division of Revenue to obtain a Uniform Business Identification Number.
4. Complete an Application for Construction Contractor registration.
5. Obtain a $12,000 surety bond (or Assigned Savings Account) and liability insurance ($250,000 combined per occurrence amount, with the Department of Labor and Industries as the certificate holder).
6. Submit the completed application, surety bond, and insurance certificate, along with the required registration fee to the Department of Labor and Industries, Contractor Registration Section.

Why Is a Surety Bond Required?

A surety bond is the contractor�s guarantee to conduct business in accordance with all relevant laws, regulations, and industry standards as spelled out in the terms and conditions of the bond agreement. The bond provides protection for anyone who might suffer a financial loss because of the insolvency, dishonesty, or unethical conduct of a general contractor. The required bond amount ($12,000) represents the total that may be paid on a single claim against the bond.

How Does a Contractor�s Surety Bond Work?

Anyone who has suffered a financial loss due to a contractor�s violation of the surety bond agreement has the right to file a claim against the contractor�s surety bond. The company that issued the bond (known as the surety) will first conduct an investigation to ensure that the claim is valid.

Ideally, the contractor (known as the principal in the surety bond agreement) will pay any valid claim without delay. More often, however, the surety will pay the claim up front and then seek reimbursement from the principal. An indemnification clause in all surety bond agreements makes the principal solely responsible for paying claims, which means that the surety will pursue the principal for reimbursement of any claims paid in advance.

What Does It Cost?

The annual premium for any surety bond is calculated as a percentage of the required bond amount. The required bond amount is established by the Department of Labor and Industries (known as the obligee in the surety bond agreement), and the premium rate is determined on a case-by-case basis by the surety.

The surety�s main consideration in setting the premium rate is the principal�s personal credit score. The higher that credit score is, the lower the premium rate. If your credit score is good, you will probably pay somewhere between 1% and 3% of the $15,000 required bond amount.

What Are the Costs of Obtaining Surety Bonds for Contractors?

At Single Source Insurance, our knowledgeable agents will be happy to discuss your bonding needs to help you get the bond required for a contractor�s license. Apply online today.

In the state of New York, the only contractors who must be licensed at the state level are crane operators and asbestos removal professionals. However, many municipalities have licensing requirements for general contractors and home improvement professionals. Learn more about how to get a contractor�s license in New York below.

Who Needs a New York Contractor�s License?

Many of the jurisdictions requiring contractors to be licensed are in the �downstate��including counties around New York City, Long Island, and other predominantly urban or suburban areas in the southern part of the state. Few of the upstate counties or cities require contractors other than electrical contractors to obtain a license. Wherever you plan to work in New York, it�s best to check with your local county to find out if there are any unique licensing requirements for the type of contracting you will be doing.

The Licensing Process

Among the counties that do license contractors, there is wide variation in the specific licensing requirements. In general, such requirements may include:

• A completed application bearing the applicant�s Tax Identification Number (TIN)
• Proof of home address
• Proof of Worker�s Compensation insurance
• Fingerprinting and a background check
• A passing score on an exam
• A contractor�s surety bond

The requirements you may have to meet in your particular county or city may be different.

Why Is a Surety Bond Required?

The jurisdictions that require a surety bond do so to protect the public against financial loss resulting from a contractor�s failure to meet all contractual obligations in a lawful and ethical manner.

How Does a Contractor�s Surety Bond Work?

Any party who suffers a financial loss because of a contractor�s incompetence or unlawful or unethical behavior can file a claim against the bond and receive compensation. The company that issued the bond (known as the surety) will investigate to make sure that the claim is valid before it will be paid. The terms of the surety bond agreement make the contractor (known as the principal) solely responsible for paying valid claims.

Often, the surety will go ahead and pay a claim on behalf of the principal, who must subsequently reimburse the surety. This ensures that the claimant is paid promptly and gives the principal time to gather the necessary funds.

What Does It Cost?

The annual cost of any surety bond is a small percentage of the required bond amount. What a particular applicant will pay for a contractor�s surety bond depends on two factors: 1. the required bond amount, which is established by the licensing agency (known as the obligee), and 2. the premium rate the surety assigns to the applicant.

The main thing the surety considers in determining the premium rate for a given applicant is the applicant�s personal credit score. The higher the credit score, the lower the premium rate. Most contractors with good credit will pay a premium rate of between 1% and 3%.

What Are the Costs of Obtaining Surety Bonds for Contractors?

You can rely on Single Source Insurance to get you the surety bond you need in order to become licensed as a contractor in the state of New York.

In Louisiana, both commercial contractors and home improvement contractors are licensed by the Louisiana State Licensing Board for Contractors. The specific type of license required depends on the work to be performed and the size of the projects to be undertaken. General contractors working on projects of a certain size may hire only properly licensed subcontractors. Learn how to get a contractor�s license in Louisiana.

Who Needs a Louisiana Contractor�s License?

A commerciallicense is required for residential construction with no more than four incorporated or attached residential units if the combined cost of labor and materials exceeds $75,000. With a couple of notable exceptions, subcontractors and specialty contractors must hold a commercial license to work on such projects where the cost of labor and materials exceeds $7,500. Those exceptions are:

• Electrical, mechanical and plumbing contractors, who must have a commercial license to work on projects valued at $10,000 or more for materials and labor, and
• Contractors doing remediation or removal of asbestos, hazardous waste, lead paint, or underground storage tanks, who must have a commercial license for any project valued at $1 or more.

You�ll need to register as a home improvement contractor if you take on home improvement projects valued between $7,500 and $75,000 (not including swimming pools).

The Licensing Process

The registration process for home improvement contractors is relatively simple. It involves completing the Home Improvement Registration application and submitting it to the Board along with certain supporting documents. Home improvement contractors must carry general liability and worker�s compensation coverage, and are required to obtain a contractor�s license bond, regardless of where they work within the state of Louisiana.

Becoming licensed as a commercial contractor does not necessarily involve the purchase of a contractor license surety bond. Only three jurisdictions requires a surety bond as of this writing: Ascension Parish ($5,000 bond), the City of Lake Charles ($7,500 bond), and Gonzales ($5,000 bond).

Why Is a Surety Bond Required?

A surety bond protects the state, project owners, and consumers against financial loss due to the insolvency or the unethical or illegal actions of the bonded contractor. It guarantees that the contractor will conduct business in accordance with all applicable laws and standards, as set forth in the terms of the surety bond agreement. Any violation of the agreement entitles the injured party to file a claim against the bond for compensation.

How Does a Contractor�s Surety Bond Work?

The surety company will investigate any claim filed against a contractor�s bond to ensure that the claim is valid. Ideally, the contractor would immediately pay the claim, but in most cases, the contractor may need some time to gather the funds. Consequently, the surety company will pay the claim and then seek reimbursement from the contractor. It is ultimately the contractor�s legal responsibility to pay all valid claims.

What Does It Cost?

To obtain a surety bond, the contractor pays only a small percentage of the required bond amount. The surety company establishes that percentage, the premium rate, on a case-by-case basis. The primary consideration for the surety company is the contractor�s personal credit rating, which is a good indicator of the contractor�s ability to reimburse the surety company for any claims paid on the contractor�s behalf.

What Are the Costs of Obtaining Surety Bonds for Contractors?

Apply online or give us a call today to get the surety bond you need in order to obtain a commercial contractor�s license or home improvement registration in Louisiana.

In Arizona, contractors are licensed at the state level by the Arizona Registrar of Contractors (ROC). There are a number of different license classifications in Arizona, so the first step is to determine which type of license(s) you need. Learn how to get a contractor�s license in Arizona with this simple guide.

Who Needs an Arizona Contractor�s License?

You�ll need to be licensed to perform just about any kind of construction-related contracting in Arizona. The ROC�s website provides a detailed list of the various license classifications along with the experience and exams required in order to apply for each. The major classifications are:

• General engineering contracting
• General commercial contracting
• Specialty commercial contracting
• General residential contracting
• Specialty residential contracting

There are also a number of dual license categories.

The Licensing Process

There are several steps that must be completed before submitting a contractor�s license application to the ROC, including:

• Passing any required examination
• Submitting to a background check
• Obtaining a contractor�s license bond
• Paying required fees

The ROC website provides detailed instructions for each step in the licensing process.

Why Is a Surety Bond Required?

Arizona requires contractors to obtain a surety bond as a condition of licensing. The bond provides protection for the state and project owners who hire contractors against financial loss due to the contractor�s insolvency or unethical or unlawful conduct. Any party who does suffer such a financial loss has the right to file a claim against the contractor�s bond.

In addition to purchasing a contractor�s license bond, residential contractors must also pay into the ROC�s Residential Recovery Fund or post a surety or cash bond in the amount of $200,000.

How Does a Contractor�s Surety Bond Work?

The terms and conditions of the surety bond agreement spell out what the contractor must do to avoid violations that could trigger claims against the bond. When a claim is filed, the surety company will investigate it to make sure that it�s valid and should be paid.

If the contractor doesn�t pay the claim right away, the surety will usually pay it as an advance on behalf of the contractor. However, the surety bond agreement indemnifies the surety company and makes the contractor solely responsible for paying claims. Therefore, the surety will pursue the contractor for reimbursement of any advance payments.

What Does It Cost?

The cost of a surety bond is a small percentage of the required bond amount, which differs depending on the license classification and projected annual gross revenues. The ROC website provides the required bond amounts for each license classification.

The surety company sets the premium rate for each applicant based on the contractor�s personal credit score and financial situation. If your credit is good, you will probably pay a premium rate that�s in the range of 1% to 3%. Applicants with poor credit will pay a higher premium rate.

What Are the Costs of Obtaining Surety Bonds for Contractors?

The knowledgeable agents at Single Source Insurance can help you get the contractor�s license bond you need in the required amount and the lowest possible rate. Request a quote today!