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.
Understanding the Costs of Surety Bonds for Contractors in Arizona
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.
Get Bonded Today
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!